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1-1-1996 Choice of the Applicable Law in United States Maritime Law and the Venezuelan System Daniel Eric Vielleville University of Georgia School of Law

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The University of Georgia

UNIVERSITY OF GEORGIA LAW LIBRARY Alexander Campbell King Law Library

3 8425 00347 3688 Digitized by the Internet Archive

in 2013

http://archive.org/details/choiceofapplicabOOviel CHOICE OF THE APPLICABLE LAW IN UNITED STATES MARITIME LAW AND THE VENEZUELAN SYSTEM

by

DANIEL ERIC VIELLEVILLE

Abogado, Universidad Catolica Andres Bello, 1 994

A Thesis Submitted to the Graduate Faculty

of the University of Georgia in Partial Fulfillment

of the

Requirements for the Degree

MASTER OF LAWS

ATHENS, GEORGIA

1996

LAW LIBRARY UNIVERSITY OF GFORGIA CHOICE OF THE APPLICABLE LAW IN UNITED STATES MARITIME LAW

AND THE VENEZUELAN SYSTEM

by

DANIEL ERIC VIELLEVILLE

Approved:

{Apate A7^3../^^ 4

Major Pro^ssor

ai- Date 31 mt

Reading Commitee Chair

Approved:

(Sofdi^LUiX.

Graduate Dean

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Date TABLE OF CONTENTS

CHAPTER Page

I INTRODUCTION 1

II PREAMBLE 3

III CHOICE OF THE APPLICABLE LAW IN

UNITED STATES ADMIRALTY 17

IV THE VENEZUELAN SYSTEM 74

V CONCLUSIONS 100

LIST OF CASES 102

BIBLIOGRAPHY 110

111 CHAPTER I INTRODUCTION

International maritime transport is the most important mean of transport in international

trade. This activity is realized through the use of vessels, which present the unique

characteristic of traveling through the seas, sometimes inside jurisdictional water of the

states, sometimes on the so-called high seas. This special character of ships presents a

special interest for the conflict of laws studious, because of the existence of several jurisdictions on which the vessel realizes its function, and whose laws are potentially

interested in being apply to eventual controversies arising from the acts of the ship.

Furthermore, since early ages vessels confronted major perils in the sea differents to

those in land, so the same participants in this activity, vessels' owner and cargo owners,

created particular rules of law in order to make logical the exercise of maritime

commerce.

As we will see, maritime conflict of laws in the United States have an international

perpesctive, situation very useful in order to compare the American solutions with those

of other countries. Our purpose here is to analyze the conflict of laws approach followed

by United States courts and compare it with the Venezuelan system of private

international law, trying to find common points of contact. Venezuela is a civil law

country with an old maritime legislation, which is needed of actualization, so a

comparative study with a system of law that is in constant change and development as

the United States law, presents an atractive task.

Because United States has a federal system, conflict of laws present particular

1 2

characteristics that are important to look at. The fact that confllict of laws are

competence of state courts, has produced opposed approaches and several theoretical

positions about the solutions of this issues. On the other hand, maritime law has received

a special treatment by the United States constitution, and it is exclusive competence of

the federal government. This situation has translated in unique rules applicable to

maritime conflict of laws. However, the theories proposed to solve state conflict of laws

have influenced the solution of maritime conflict of laws in federal courts.

In first place, I will give an introduction to United States conflict of laws theory and their application by federal courts. At this level, my exposition will be brief, because of the complexity of this problems, that would imply a complete work of investigation. In

second place, I will analyze conflict of laws in admiralty and maritime jurisdicition, first in general and second in each particular institution of this area of law. In this sense the

study of the case law is fundamental. Finally, I will study the Venezuelan system of private international law with special attention to the field of maritime law conflicts.

Also I will look at the new legislative proposals now in discussion in Venezuela. I hope, at the end of this investigation, to find certain points of contact between both system, and

if one of them is more developed than the other, as I expect to conclude, how the

Venezuelan legislation can be improved by the incorporations of the American ideas, or if some of those solutions are incompatible with the purposes and expectations of the

Venezuelan law.

Normally, the field of Conflict of laws includes the study of problems of choice of the applicable law as a principal subject, but also includes jurisdiction, proof of foreign law, recognition of foreign acts and judgements, and international procedural law. However,

I will only deal in my investigation with problems of choice of the applicable law for a

simple reason: a researching comprehending all subject will be too ambitous. I think that my investigation would be more productive dealing with a restricted field of study than trying to reach all aspect of Conflict of Laws. CHAPTER II PREAMBLE

Before start to deal with the specific problems of maritime conflict of laws, is essential to review some concepts that are necessary to consider, in order to understand my area of

study. First, I will give you some ideas about Maritime Law, and then I will briefly review the United States conflict of laws system.

A. Maritime Law

Maritime Law or Admiralty' is the area of Law which studies the legal consequences of the transport through water. Approximately three quarters of the world's international commerce is taken care by water. This can give us an idea of the importance of the development of coherent legal rules, which can not create obstacles to a very dynamic economical activity.

One of the principal characters of Maritime Law is its international essence." Mostly all situations that maritime law regulates, contain factors from different countries. As consequence, legislators must have in mind that when they enact a legal rule, this would probably affect foreign parties in their economic activities with national parties. From

' For a differentiation between Admiralty and Maritime Law, see 1 THOMAS SCHOENBAUM,

Admiralty And Maritime Law 2 (1987). Even if there are differences between Admiralty and Maritime Law, for my purposes we will give them the same treatment.

". admiralty law rules frequently have an international origin"; Id. at 155. See also R. RODIERE

1 1 Droit Maritime 6 ( 97 1 ); A. Brunetti Derecho Maritimo Privado 52 1 950); A. Scialoja Sistema Del Derecho De La Navegacion 59 (1950). .

4 this international character, we can also conclude that is very important, for a maritime lawyer, to handle the discipline of conflict of laws connected to Admiralty. A very high percentage of maritime cases first deal with choice of the applicable law, before applying substantive law to the case.-'

Other characteristic of Maritime Law important for our study, is its special character."*

Studying the historical development of Maritime Law we can see that it has its own institutions, quite different comparing to those of commercial law.^ For example, the contract of carriage of goods by sea has fundamental differences with the contract of transport by land; the maritime insurance differs of the others types of insurance (e.g. life, fire, etc.). Is very important to understand that when dealing with maritime law problems, we need to realize that those problems have to be solve according to the principles of this particular law.

Since the beginning, maritime law was exercised by merchants and it was not a legislative creation of lawyers. For this reason, Admiralty contains practical solutions and not complicate legal schemes. Also, there is a tendency by the parties to solve by themselves eventual controversies, and that is why maritime arbitrage has been so successful. Even if a large amount of claims go to courts, a large percentage are solve by private agreements for commercial reasons. On the other hand, party autonomy has represented an important role through the development of Maritime Law and, even if

governments have made efforts to restrict it in some justified situations, it will still being a transcendental institution.

^ Brunetti, 5wpra note 2.

Id., at 25. see also SCIALOJA, supra note 2, at 1

^ However is important to notice that the continental legislations in the XVIII century, influenced by the French Code, included the commerce by sea in their commercial codes; see Bruneti, supra note 2, at 25. 5

B. Conflict ofLaws

We already said that this study will included only problems of choice of law. and not other areas of Conflict of Laws. Before to start dealing with admiralty problems, is important to make some comments about United States Conflict of Laws in general.

1. The Constitution and the choice of the applicable law

The Constitution of the United States has played a transcendental role in the evolution of conflict of laws theory in the United States. While five provisions of the United States

Constitution have been identified as relevant for conflict of laws purposes.^ two

Constitutional Clauses have been primordial in the evolution of the interpretation of choice of law problems in the United States.^ In first place, there is the "due process

clause" of section 1 of the XlVth Amendment to the Constitution, which reads: "... nor shall any State deprive any person of life, liberty, or property, without due process of

law...". In second place, there is the "Full Faith and Credit" Clause of section 1 of Article

IV, which text is:

"Full faith and credit shall be given in each State to the public Acts, Records and

judicial Proceedings of every other State. And the Congress may by general

Laws prescribe the Manner in which such Acts, Records and Proceedings shall

be proved, and the Effect thereof."^

^ Peter E. Herzog, Constitutional Limits on Choice ofLaw. 234 R.C.A.D.I. 239, at 258 (1992).

' The leading cases in the evolution are New York Life v. Dodge, 246 U.S. 357 (1918); Mutual Life v. Liebing, 259 U.S. 209 (1922); Home Insurance v. Dick, 281 U.S. 397 (1930); Bradford Electric v. Clappler. 286 U.S. 145 (1932); Hartford Accident and Indemnity Co. v. Delta and Pine Land Co., 292 U.S. 143 (1934); Alaska Packers Ass'n v. Industrial Accident Comm'n, 294 U.S. 532 (1935); Pacific Employers Ins. Co. v. Industrial Accident Comm'n, 306 U.S. 493 (1939); Watson v. Employers Liability Assurance Corp., 348 U.S. 66 (1954); Carrol v. Lanza, 349 U.S. 408 (1955); Clay v. Sun Insurance Office., Ltd., 377 U.S. 179 (1964); Nevada v. Hall, 440 U.S. 410 (1979); All State Insurance Co. v. Hague, 449 U.S. 302 (1981); Phillips Petroleum Co. v. Shutts, 472 U.S. 797 (1985).

Capitalization as in the original. 6

Even if the two Clauses seem to have different purpose and meaning, the U.S. Supreme

Court, in Allstate Ins. Co. v. Hague,"^ explained that the "Court has taken a similar approach in deciding choice-of-law cases under the Due Process Clause and the Full

Faith and Credit Clause. In each instance, the Court has examined the relevant contacts and resulting interest of the State whose law was applied.'"" The Supreme Court concluded "that for a State's substantive law to be selected in a constitutionally permissible manner, that State must have a significant contact or significant aggregation of contacts, creating state interest, such that choice of its law is neither arbitrary nor fundamentally unfair."" This reasoning seems to led to the conclusion that the United

States Supreme Court has given to the States a complete autonomy in choice of law problems, but further case law prohibits to reach to such conclusion.'^

2. Conflict of laws approaches in the United States a. Introduction

Being the limits in state choice of law so wide, each State of the United States has freedom to apply the choice of law approach more convenient to its own interests.

Actually, there are several conflict of laws solutions being using in the United States.

Even if our is purpose is not to make a complete exposition of the theories, is important to mention their general characteristics and see how they can conduce to different results.

M49U.S. 302.

'" 449 U.S. at 308. The Full Faith and Credit Clause, for example, is inapplicable in international situations, see Herzog, supra note 6, at 282.

" 449 U.S. at 312. However, the decision could be criticized because the contacts between the incident and the applied law, Minnesota law, were too slightly, see Herzog, supra note 6, at 268.

" See. e.g., Phillips Petroleum v. Shutts, 472 U.S. 797 (1985). See also Herzog, supra note 6, at 268. 7

The influence of Aldricus Ruber's works'^ in early United States conflict of laws theories is notorious.''* Joseph Story wrote that "the true foundation on which the administration law must rest is that the rules which are to govern are those which arise from mutual interest and utility, from a sense of the inconveniences which would result from a contrary doctrine, and from a spirit of moral necessity to do justice, in order that justice may be done to us in return,"'^ and his proposals were accepted in United States courts during the last century.'^ However, the theory of "comity" was criticized in the United

States specially by Joseph Beale," whose "vested rights doctrine" became "highly influential in the courts until the 1950's".'^ b. First Restatement

The First Restatement'^ was drafted by a commission presided by Joseph Bealy, and reflects in large size the conclusions of the vested rights doctrine, representing a territorial solution to conflict of laws problems. For example, in case of torts, the

Restatement stated that "the place where the last event necessary to make the actor liable occurred was the place of the wrong and thus the source of the governing law: the law of

'^ "Praelectionum Juris civilis tomi tres". For a translation to English of Huber's magnificent text, see Ernest Lorenzen, Selected Articles on The Conflict of Laws 136(1 947). Huber proposed three "1 maxims: . The law of each state have force within the limits of that government and bind all subjects to it, but not beyond; 2. All persons within the limits of a government, whether they live there permanently or temporarily, are deemed to be subjects thereof; 3. Sovereigns will so act by way of comity that rights acquired within the limits of a government retain their force every where so far as they do not cause prejudice to the powers or rights of such government or of their subjects."; see id. at 136, 137.

'* M. See also SCOLES & HAY , CONFLICT OF LAWS 12(1 982).

'^ Joseph Story, Commentaries on the Conflict of Laws, Foreign and Domestic 34 (l 834).

'^ SCOLES & Hay, supra note 14, at 13.

'^ J.H.Beale, 3 Cases ON the Conflict of Laws 5 17 (1901).

ScOLES & Hay, supra note 14, at 14. The leading judicial authority regarding the "vested rights doctrine" is Slater v. Mexican National Railroad Co., 194 U.S. 120 (1904).

'^ Restament of the Law of Conflict of Laws (1934). 8 the place of the wrong. "^° According to Beale only the law were the act happened may

creates a right, and once a right is created according with a competent law, it has to be recognized by the other States.-' Initially was adopted by all the States, but has been abandoned for approximately half of them.^^

However, the drafting of the First Restament was criticized in effective form initially by

Walter Cook"^ and Ernst Lorenzen,^'' and subsequently by David Cavers-- and Brainerd

Currie,^^ because of the rigidism of its rules and the greater weight assigned to foreign law in opposition to local law.-'' c. Interest analysis

The theory proposed by Brainerd Currie,'^^ with great impact in the United States, argues that the "central problem of conflict of laws may be defined... as that of determining the appropriate rule of decision when the interest of two or more states are in conflict-in other words, of determining which interest shall yield."^^ He considered that a court was

^° SCOLES & Hay, supra note 14, at 552.

- Gonzalo Parra Aranguren, Origen y Evolucion del Sistema Anglo-Americano de Derecho Internacional Privado, Revista de Derecho y Legislacion 45 (1966).

^- Georgia is still one of the States applying traditional choice of law rules, see General Telephone Co.

V. Trimm, 252 Ga. 95(1984).

^^ Walter Cook, The Logical Bases of the Conflict of Laws 3 (1942).

^'^ Ernst Lorenzen, Territoriality, Public Policy and the Conflict of Laws l (1947).

-^ David Cavers, A Critique of the Choice ofLaw Problem, 47 Harv. L. Rev. 173 (1933).

^^ Brainerd Currie, Selected Essays on the Conflict of Laws 183 (1963).

^' Scoles & Hay, supra note 14, at 14.

^^ CURRIE, supra note 26. Is important to notice that part of Currie's work were influenced by the

Supreme Court decisions regarding constitutional limits on choice of law, see supra note 7.

^'^ Id. at 178. 9

not in a position to weigh conflicting interest,^° but until the moment that judicial

conflict of laws rules were abolished, court should expect to apply its own law.^' While

Currie's works have been criticized,^- its influence is fundamental in order to understand

United States conflicts of laws, because of its acceptance by several state jurisdictions of

this Country. ^^ However, the process by which a court identifies the interests of the states

involved in a conflict of laws situation, is a preponderant part of choice of law in

admiralty cases.

^^ Id. at 180. Currie explained that interest weighing was not a judicial function, but an attribution of

Congress, see id, at 182.

^' Currie proposed the following method:

"1. Normally, even in cases involving foreign elements, the court should be expected, as a matter of course, to apply the rule of decision found in the law of the forum.

2. When it is suggested that the law of a foreign state should furnish the rule of decision, the

court should , first of all, determine the governmental policy expressed in the law of the forum. It should then inquire whether the relation of the forum to the case is such as to provide a legitimate basis for the assertion of an interest in the application of that policy. This process is essentially the familiar one of construction or interpretation. Just as we determine by that process how a statute applies in time, and how it applies to marginal domestic situation, so we may determine how it should be applied to cases involving foreign elements in order to effectuate the legislative purpose.

3. If necessary, the court should similarly determine the policy expressed by the foreign law, and whether the foreign state has an interest in the application of its policy.

4. If the court finds that the forum state has no interest in the application of its policy, but that the foreign state has, it should apply the foreign law.

5. If the courts finds that the forum has an interest in the application of its policy, it should apply the law of the forum, even though the foreign state also has an interest in the application of its contrary policy, and, a fortiori, it should apply the law of the forum if the foreign state has no such interest.", id., at 183, 184.

" See, e.g.. Gonzalo Parra-Aranguren, General Course ofPrivate International Law. 210 R.C.A.D.I.

9, at 171 (1988); Larry Kramer, Rethinking Choice ofLaw, 90 COLUM. L. REV. 277 (1990); Harold I. Kom, The Choice-of-Law Revolution: A Critique, 83 COLUM. L. REV. 772 (1983). For a complete resume of Currie's critics, see Herma Hill Kay, A Defense ofCurrie's Governmental Interest Analysis, 215 R.C.A.D.I. 9 (1989).

" See, e.g. Bemkrant v. Fowler, 55 Cal.2d 588 (1961), Lilienthal v. Kaufman, 239 Or. 1 (1964). 10

d. Center of gravity

In 1963, the State of New York started to apply its own choice of law methodology

regarding torts,^'' in the well-know decision of Babcock v. Jackson?^ where it was stated

that "justice, fairness and "the best practical result" ... may best be achieved by giving

controlling effect to the law of the jurisdiction which, because of its relationship or

contact with the occurrence or the parties, has the greatest concern with the specific issue

"^^ raised in the litigation. This reasoning is similar to the one of the Restament Second,

as I will refer, but in sometimes has degenerated in a mere counting of contacts without a

real analysis of the significant factor related to the specific issue."

e. Comparative impairment

A solution proposed and applied by California courts^* in tort cases,^^ based upon the work of Prof William Baxter,''" "seeks to determine which state's interest would be

^^ Previously, in 1954, the New York Supreme Court had been accepted the "center of gravity:

doctrine regarding contracts, see Auten v. Auten, 308 N.Y. 155 (1954) ("Under this theory, the courts, instead of regarding as conclusive the parties' intention or the place of making or performance, lay emphasis rather upon the law of the place "which has the most significant contacts with the matter in dispute").

^^ 12 N.Y. 2d 473, 240 N.Y.S.2d 743, 191 N.E.2d 279 (1963). The facts of the case were as follows: a

group of resident of the State of New York went in a trip to Canada. As Mr. Jackson was driving in the

Province of Ontario, he lost control of the vehicle; it went off the highway into an adjacent stone wall, injuring Ms. Babcock.

36 Id., at 481.

^^ See, e.g., Haag v. Barnes, 9 N.Y.2d 554 (1961). For subsequent New York case law regarding the

center of gravity approach , see SCOLES & Hay, supra note 14, at 594.

38 See, e.g.. Bemhard v. Harrah's Club, 16 Cal.3d 313 (1976).

^^ ScOLES & Hay, supra note 14, at 580.

40 William Baxter, Choice ofLaw and the Federal System, 16 STAN. L. REV. 1 (1963). 11

more impaired if its policy were subordinated to the policy of the other state.'"" Is important to notice that this approach starts from what Currie called a "true conflict"/^

f. Principles of reference

According to the author of this approach, David Cavers, "we should persevere in the search for rules or principles which would determine when the law of a state which served one purpose should be preferred to the law of another state which served a different purpose. ""'^ In this order, Cavers proposed seven rules (principles of reference).

For example, his first principle is that "the law of the state of injury should apply if it is more protective of plaintiff than the law of the states in which the defendant resides or acted."'*'' This approach has been used in the Unites States by some state courts.'*^ g. The better law

Prof. Leflar, another participant in the drafting of the Restatement Second, proposed five choice-influencing consideration that are generally applied by courts.'*^ According to

Leflar, the considerations are: a) predictability of results; b) maintenance of interstate and international order; c) simplification of the judicial task; d) advancement of the forum's governmental interest; and. e) application of the better rule of law.''' Of all the above principles, the last one (the better law) is the only innovation by Leflar, and means that "the inclination of any reasonable court will be to prefer rules of law which make

'" 16Cal.3dat318.

"*" A "true conflict" is tiiat in which the concerned states have interests in the resolution of the controversy, see Foster v. Legget, 484 S.W.2d 827 (Ky. 1972); SCOLES & HAY, supra note 14, 565.

"•^ David Cavers, The Choice of Law Process 1 2 1 ( 1 965).

^Ud.dXMX, 122.

''^ See, e.g., Cipolla v. Shaposka, 439 Pa. 563 (1970).

"•^ Robert Leflar, Choice-Influencing Considerations in Conflicts Law. 41 N.Y.U. L. REV 267 (1966).

^^ Id., at 282, 304. . )

12

good socio-economic- sense for the time when the court speaks...'"'* Leflar's formulation

was well received in several States.'*'^ Initially proposed to temper the forum preference

^° by its own law, it has generally resulted in an application of the law of the forum.

h. The Second Restament

Is easy to understand the confusion created in the United States courts after the

formulation of all the conflict of laws theories above referred. Taking in consideration

such situation, the American Law Institute decided the elaboration of a second

Restatement of the Conflict of Laws. ^' The work was finish in 1971^- and reflects the

ideas of the Reporter, Prof. Willis Reese. In 1952, Reese had been exposed his ideas

about resolution conflict of laws cases." Those ideas and the concept of the "most

significant relationship" represent the main elements of the Restament (Second).^'* En first place, the Restament includes a list of general policy considerations which serve as guide in the application of the specific sections,^^ most of which referred to Section 6.^^

The list includes: (1) the needs of the interstate and international systems, (2) the relevant policies of other interested states including their interest in having their law applied to the particular issue, (3) the protection of party expectations, (4) the basic

''^ Robert Leflar, More on Choice-Influencing Considerations, 54 Calif. L. Rev. 1584, 1588 (1966).

"^ See, e.g., Milkovich v. Saari, 295 Minn. 155 (1973); Clark v. Clark, 107 N.H. 351 (1966).

^° SCOLES & Hay. supra note 14, at 3 1

^'M. at34.

^^ Restament (Second) Conflict of Laws (1971).

" Elliot E. Cheatham & Willis L. M. Reese, Choice of the Applicable Law, 52 COLUM. L. REV. 959 (1952).

^'' ScOLES & Hay, supra note 14, at 35.

^^ Restament (Second) Conflict of Laws 6 1 97 § ( 1

^^ SCOLES & Hay, supra note 14, at 35. 13

policies underlying the particular field of law, (5) the objectives of certainty,

predictability, and uniformity of result, and (6) the ease of determining and applying the

law previously identified as applicable." In second place, the concept of the "most

significant relationship" was taken by the drafters of the Restament from the British

author J.H.C Morris. ^^ becoming one the greatest contributions to the study of conflict of

laws.^^ As I will study, admiralty conflict of laws cases in the United States are profoundly influenced by the ideas of the Second Restament, being given strong weight to the "most significant relationship" and the interest analysis theory,

i. Application of the different approaches

In order to understand in general terms all this system, we can make an example with the facts of Babcock v. Jackson.^" In this case, a group of New York residents traveled by car to Ontario, Canada, suffering an accident in inside that country. The guest, Babcock, brought a negligence action against the driver, Jackson. At that moment, Ontario had a so-called "guest statute", by which the driver was not liable for damages resulting fi-om injury to the guest. On the other hand, New York had ordinary negligence. The New

York Court of Appeals applied the "center of gravity "approach, and decided that New

York had a greater interest in the controversy because both guest and driver were New

York residents, the automobile was licensed and insured in that State, and the trip began and was to end there. But in this case, the Court also analyzed the policies of both States

^^ See Cheatham & Reese, supra note 52, at 962. Is important to notice that this "laundry list" is very similar to Leflar's "choice-influencing considerations" with the exception of the "better law".

^^ J.H.C. Morris, The Proper Law ofa Tort, 64 Harv. L. Rev 881 (195 1).

^^ William Tetley, International Conflict of Laws 1 1 (1995). Section 1 88 of the Second Restament represents a classic example of the application of the theory: "The rights and duties of the parties with respect to an issue in contract are determined by the local law of the state which, with respect to that issue, has the most significant relationship to the transaction and the parties under the principles stated in sect. 6."

^° Id. at 482. 14 in a way close to the method of Section 6 of the Restatement (Second). ^^ If this case would be solved according to the First Restatement, the Court probably would apply

Ontario law because of the "place of the tort" rule. Applying an interest analysis approach, the Court first stepwould be to find the policies of both laws. New York policy was to protect New York's guest for the negligence of New York's drivers. Ontario's policy, on the other hand, was to protect Ontario's drivers and insurer against frauds by

Ontario's guests. In this case, the driver and the insurer are not from Ontario, so it has not interest in see its law applied, being New York the only one with an interest in the controversy. This example is what Currie called a "false conflict". If the Court would

apply Restatement (Second), it would find that New York has the most significant relationship with tort, but the Court also should analyze the laundry list of Section 6, to see if there is some policy against the application of New York law. In case the Court

would apply Comparative Impairment, it would analyze which law would be more significantly impaired if such rule were not applied. In this case, is very probably that the

Court would decide that New York law would be applied because of the greater interests of the State of New York in relation to the interest of Ontario. But if the Court were

dealing with Cavers' Principles of Reference, it would apply New York law because is a false conflict and Cavers' principles were proposed as a solution to interest analysis' "true conflicts". Finally, if the Court were applying the Better Law approach, is very probable that would choose New York law because of the forum's governmental interest and the application of the better law (in Milkovich v. Saari, the Minnesota Supreme Court made this determination in a very similar case).

3. Federal conflict of laws

As we will see, admiralty cases in the United States are competence of federal courts, so is important to know how the latter solve conflict of laws problems.

^' Mat 482. 15

Until 1938, the United States Supreme Court" held that, in a diversity of citizenship

case, a federal court was free to interpret or to decide what is was the common law of the

State where it was seated.^^ This situation produced discrimination between citizens and

noncitizen. Then, in the famous case of Erie R. Co. v. Tompkins,^^ the Court held that

Swift was an unconstitutional intromission of the federal judiciary in the powers granted by the Constitution to the States.^^ The Supreme Court held that "except in matters governed by the Federal Government or by Acts of Congress, the law to be applied in

"^^ any case is the law of the State. Later, in Klaxon Co. v. Stentor Elec. Mfg. Co.,^^ the

Supreme Court extended the Erie Doctrine to the field of Conflict of Laws. In Klaxon,

the Court held that federal court must apply the conflict of laws rules of the state where it is sited.^*

As consequence of Erie and Klaxon, we find that federal court shall apply the conflict of laws approach of the jurisdiction where they are sited, when deciding on diversity of citizenship jurisdiction.^^ Analyzing the Klaxon Doctrine in accordance with the judicial limitation on state conflict of laws settled down by the Supreme Court, we can conclude

" Swift V. Tyson, 41 U.S. (16 Pet.) 1,10 L.Ed. 865 (1842).

^^ See. Henry J. Friendly, In Praise ofErie-and of the New Federal Common Law, 39 N.Y.U. L. REV. 383(1964).

^^304 U.S. 64(1938).

^^ Id. at 79.

^* Id. at 78 ("And whether the law of the State shall be declared by its Legislature in a statute or by its highest court in a decision is not a matter of federal concern").

^"^ 313 U.S. 487 (1940).

Id. at 496 ("We are of opinion that the prohibition declared in Erie R. Co. v. Tompkins, 304 U.S. 64, against independent determinations by the federal courts, extends to the field of conflict of laws").

69 For an interesting case applying the Klaxon doctrine, see in Day & Zimmermann, Inc. v. Challoner, 423 U.S. 3 (1975). For a comment and critic to Klaxon, see SCOLES & HAY, supra note 14, at 111. 16 that federal jurisdiction has the same diverseness characteristic that we saw in state courts.''*' From this point, our purpose is to analyze how this present situation reflects on the admiralty field.

'° SCOLES & Hay, supra note 14, at 1 13. CHAPTER III

CHOICE OF THE APPLICABLE LAW IN UNITED STATES ADMIRALTY

A. The Constitutional Reserve ofMaritime Law

Admiralty Jurisdiction presents a very special treatment in the United States legal system. The Constitution states that the judicial power of the United States has concurrent competence "of all cases of admiralty and maritime jurisdiction."^' This exclusive competence is the only of its kind included in the Constitutional text,^^ but the meaning of its inclusion was not debated by the founders fathers. ^^ The Benedict on

Admiralty explains that the special character of maritime law could only be secured by

granting the power over it to a national power in both the creation of laws and the resolution of controversies.^''

This judicial power was interpreted by the Supreme Court, in De Lovio v. Boit'^ as embracing "all maritime contracts, torts and injuries, or, in other words, to embrace all those causes which originally and inherently belonged to admiralty".'^ Here, we are not

^' U.S. Const, art. Ill, section 2.

'^ See 1 SCHOENBAUM, supra note 1, at 55.

''Id.

''' 1 BENEDICT ON ADMIRALTY 7-12 (1995).

'^ 7 F.Cas. 418 (No. 3776) (C.C.D.Mass. 1815).

'^7F.Cas. at443.

17 1

18

going to deal with the jurisdictional problems arising from the constitutional reserve, but

only understand that as consequence of the above referred reserve, and federal

legislation expanded, federal district courts, court of appeals and the Supreme Court

have exclusive jurisdiction over admiralty cases and, when deciding a particular case,

they must apply federal maritime law7^

B. General Maritime Law

The first purpose of this thesis its to analyze if there is, in United States case law, a conflict of laws approach which could guide courts in conflict of laws issues raised in admiralty cases. In order to comply with our purpose we first need to study the "law of the flag" as the traditional main conflict of laws factor, and how the problems arising from its application conduced to the modem solution now applied by United States courts.

1. Law of the flag a. The territorial theory

Before the establishing of the nation-states in the fifteen century, there were few conflict of laws problems in maritime law.^^ Through all Europe existed a called lex maritima,

''^ accepted by the merchants in all European ports as part of the lex mercatoria. This law

^^ See, e.g., Romero v. International Terminal Operating Co., 358 U.S. 354 (1959) ("Article III impliedly contained three grants. (1) It empowered Congress to confer admiralty and maritime jurisdiction on the'Tribunals inferior to the Supreme Court" which were authorized by Art. 1 s 8, cl. 9. (2)

It empowered the federal courts in their exercise of the admiralty and maritime jurisdiction which had been conferred on them, to draw on the substantive law "inherent in the admiralty and maritime jurisdiction"... and to continue the development of this law within constitutional limits. (3) It empowered Congress to revise and supplement the maritime law within the limits of the Constitution."). The Romero decision has been often quoted to explain the modem judicial interpretation of the Supreme Court regarding the constitutional provision. For a complete exposition of Admiralty Jurisdiction see generally, I SCHOENBAUM, supra note 1, at 55, 56; 1 BENEDICT, supra note 73, at 7-22.

'^ For a complete study of the "law of the flag", see generally, WILLIAM Tetley, supra note 59, at 1 8

(1995); Pierre Bonassies, La Lot du Pavilion et les Conflits de Droit Maritime, 128 R.C. A.D.I. 505 (1969); S. Braekhus, Choice ofLaw Problems in International Shipping 164 R.C.A.D.I. 259 (1979).

^^ Tetley, supra note 59, at 182. 19

was customary, but acquired more importance when it was codified. Examples of that are the famous Roles of Oleron, the Consolato del Mare and the Visby Rules.*"

However, as mentioned, with the grown of the strong and unified nations, it increased a desire for national laws, which give to the king a greater control over the activities happening inside of his kingdom.*' This desire of control, extended to the nation's contiguous water, which was subject to the laws of that state, and the concept of territorial sea was established. The ships were starting to be considered part of the state's territory, the so-called "floating island" theory. This theory was invoked first in order to define the public law regime of a vessel in high seas.*^ Soon, it was extended to the justification of the law of the flag as the main connecting factor in maritime conflict of laws cases."

Public International Law has given great importance to the law of the flag. In this sense, the Geneva Convention on the High Seas^'' and the United Nations Convention on the

Law of the Sea of 1982*^ state that a State has an exclusive jurisdiction in high sea over

*° Id. The Roles were accepted in northern and western Europe; the Consolato was applied in the

Mediterranean Sea; and the Visby Rules in the BaUic.

*' Id. at 183.

*^ Rodiere, supra note 78, at 514.

^ In Lloyd V. Guibert, the Queen's Bench said: "the subject-matter of the contract, the employment of a sea-going vessel for a service, the greater and more onerous part of which was to be rendered upon the high seas, where, for all purposes of jurisdiction, criminal or civil, with respect to all persons, things, and transactions, on board she was, as it were, a floating island, over which France had as absolute, and for all purposes of peace as exclusive, a sovereignty as over her dominions by land, and which, even whilst in a foreign port- according to notions of jurisdiction adopted by this country, and carried to a greater length abroad- was never completely removed from French jurisdiction.". (1865) L.R. 1 Q.B. 1 15 at 127 (Ex. Ch.).

^^ Geneva Convention on the High Seas, April 29, 1958, 13 U.S.T2312, 450 U.N.T.S. 82.

*^ United Nations Convention on the Law of the Sea, Dec. 10, 1982,21 I.L.M. 1261. 20 a vessel flying its flag. The United States Convention on the Law ofthe Sea of 1982, as well as the United Nations Convention on Conditions for Registration ofShips,^^ stipulate that there must be a genuine link between the vessel and the country whose flag

^^ is flying.

In the field of private law, there are several international treaties incorporating the law of flag as the sole factor in conflict of laws cases. In this sense, the Bustamante Code,^^ the

Treaty on International Commercial Navigation Law,^^ the Salvage Convention,^" and the 1910 Collision Convention^' among others, provide rules including the law of flag as connecting factor, b. First Restatement

United States was not exempted of this influence, and the First Restatement recognized a right of each State to have jurisdiction over vessels flying its flag.^"^ As consequence of

^^ United Nations Convention on Conditions for Registration of Ships, Feb. 7, 1986, U.N. Doc. No.

TD/RS/CONF/23, not yet in force. The text is printed in THE Neth. Inst. FOR THE Law of THE Sea (NILOS), 1986 Documentary Yearbook 596 (1988).

^^ As I will refer in this thesis, one of the main problems of the law of the flag as a connecting factor in maritime conflict of laws cases is the existence of the so-called "flag of convenience", by which a ship flies the flag of a State with who it does not have any relation.

^^ Code of Private International Law, Havana, Feb. 20, 1928, 86 L.N.T.S. 111.

on Treaty on International Commercial Navigation Law, Montevideo, Mar. 19, 1940, reprinted in

Tetley, supra note 59, at 1016-1022.

^° International Convention for the Unification of Certain Rules of Law with Respect to Salvage, Sept.

23, 1910, reprinted in 3 SCHOENBAUM, supra note 1, at 934-938.

'' International Convention for the Unification of Certain Rules of Law with Respect to Collisions between Vessels, Sept. 23, 1910, reprinted in 3 SCHOENBAUM, supra note 1, at 632.

^^ RESTATEMENT ON THE CONFLICT OF LAWS § 45 (1934). 21

the territorial influence of the Restatement, several issues were subject to the law of the

flag.^3

c. Restatement Second

Following the new ideas questioning the validity of the law of the flag, and the modem

Supreme Court case law, the Restatement (Second) just recognized the principle that

vessels flying the flag of one state have a right to innocent navigation in territorial waters

of another state.^"* These principle was further developed in the Restatement (Third) of

Foreign Relations Law,^^ which states that "a ship has the nationality of the state that

registered it and authorized it to fly the state's flag, but a state may properly register a

ship and authorize it to fly the state's flag if there is genuine link between the state and the ship." d. Judicial decisions

North American courts have relied in the law of the flag in numerous opportunities.^^

One of the leading cases is the Wildenhus's Case!^' where the Supreme Court stated the general principle that the law flag controls the internal discipline and administration of a

^^ Tetley, supra note 59, at 193. According to the First Restatement, torts committed in territorial waters and affecting only the internal order of the vessel (sect. 405), tort committed on board ship on the high seas (sect. 406), collisions on high seas (sect. 410), etc., were subject to the law of the flag.

^^ Restatement (Second) of Conflict of Laws § 56 cmt. a ( 1 969).

^^ Restatement (Third) of Foreign Relations Law § 501 (1986).

^^ The territorial theory was accepted by United States courts in the nineteenth century. See, e.g.. Pope

V. Nickerson, 19 Fed. Cas. 1022 (Case No. 1 1,274)(C.C. Mass. 1844); Schooner Exchange v. M'Faddon, 11 U.S. (7 Cranch) 116(1812).

^' Mali V. Keeper of Common Jail, 120 U.S. 1 (1887). The case concerned the murder of a Belgian seaman by a Belgian seaman on the board of a Belgian steamship lying moored in territorial waters of the United States. .

22

ship, being the exception those matters affecting the public order of the state where the

ship is located.'^

There are several important cases applying the law of the flag in conflict of laws cases.

In Klinghoffer v. S.N.C. Achille Lauro,^^ it was applied the law of the flag to tort

committed on the high seas.'°° In The Titanic,'"' the Supreme Court held that the civil

liability arising from an allision (single ship collision) in the high seas was controlled by the law of the flag.'°^ In The Scotland,'"^ the Supreme Court held that the law of the common flag applied in the case of a collision between two ships of the same flag.'°^ d. Critics to the Law of the Flag

Authors have identified several problems arising of the law of the flag solution. '°^ One of the most studied problems is the fact that a an estimated of 40% of the world's ship fly what is called "flag of convenience".'"^ A flag of convenience is such that is flying by a ship which has not connection to the flag's State, because of certain financial or

^* 120 U.S. at 18. ("Disorders which disturb only the peace of the ship or those on board are to be dealt with exclusively by the sovereignty of the home of the ship, but those which disturb the public peace may be suppressed, and, if need be, the offenders punished, by the proper authorities of the local jurisdiction.").

'^795F.Supp 112(1992).

100 jgjLEY, supra note 59, at 201 . However, it seems to me that the law of the flag was used as one the factors (according to the court the more important) of the Lauritzen test.

'°' 233 U.S. 718(1914).

'°" 233 U.S. at 732. ("It is true the act of Congress does not control or profess to control the conduct of a British ship on the high seas. It is true that the foundation for a recovery upon a British tort is an obligation created by British law"). However, the Court applied the law of the forum to the limitation of liability issue. See also The Amoco Cadiz, 954 F.2d 1279 (1992).

'°^ 105 U.S. 24(1881).

'°'' See also The Belgenland, 1 14 U.S. 355 (1885).

'°^ For a complete exposition of the problem, see Tetley, supra note 59, at 212.

'°^ See Tetley, supra note 59, at 2 1 3 . '

23 economical benefits in the law of such State, as labor regulations, tax laws, etc. The flags of convenience create problems of different kinds. First it all, they represent a danger for the safety navigation at sea, protection of the environment, pollution, and other international concerns, because of the absence of control by the flag's State.

Second, is it logic to apply the law of a country who has no relation with ship, just

'°' because is the flag's State?. In Rainbow Line Inc. v. M/V Tequila'"^ the court recognized the fact that the owners did not have any relation with the place of

'°^ registration of the vessel.

Other problem is with bareboat charters. In these kind of contract, a person lease a complete vessel without crew and, as required for several countries, the lessor register the ship in that country for the time that contract last."° This create the possibility of have two registers, the one where the ship is original registered and the one where the

contract is registered. Other legislations, as Germany keep both registries open, so it could be difficult to identify which flag must apply."

Modem legislation has restricted the application of the law of the flag concept. The

Rome Convention of 1980,"^ for example, makes no mention, and applies the most closely connected solution. However, recent statutes as the Maritime Code of China and

'°^ In the British case of The Assunzione, [1953] 1 W.L.R. 929 at 928, the Probate Division held: "in these modem times there are a number of ships sailing the seas wearing the flags of countries with which their owners have really no association at all. Bearing that in mind, it seems to me to be saying too much to assert that the ship's flag is a circumstance which must necessarily be given great weight in every case".

'°*480F.2d 1024(1973).

'"^ See also Tetley, supra note 59, at 221

' '° Bareboat charter are commonly used for financial reasons, where the financier of a sale of a ship remains the as registered owner until the buyer cancel the purchase price. See Braekhus, supra note 78, at 285.

' ' ' Tetley, supra note 59, at 2 1 7.

"^ Convention on the Law Applicable to Contractual Obligations, 80/934/EEC, 1980 J.O. (L 266) 1. 24

the Netherlands Conflict of Maritime Laws Act contain important provisions

incorporating the law of the flag as conflict of laws rule."^

In order to limit the practical problems created by the application of the law of the flag

rule, United States courts, as well as other countries tribunals, have implemented several

devices to correct the above mentioned difficulties."'' One is piercing the corporate veil,

"where the rights and liabilities of the corporation are also of the shareholders","^ and

other is lifting the corporate veil, "that is to look at the shareholdings for some legal

purpose"."^ We do not want to enter in details regarding this legal devices, but is

important to notice their existence."^

2. Lauritzen

Until this moment we find that the law of the flag was often used by United States courts

in order to solve conflict of laws cases in maritime controversies. However, it was farther to be a solution of general acceptance, and courts used to apply solutions involving just one connection factor (law of the flag, locus delicti, locus contracti, etc.) depending of the particular case."^ In 1953, the Supreme Court of the United States"^ started to develop the modem required analysis of conflict of laws issues in admiralty.

"^ Tetley , supra note 59, at 21 1, 212.

^^^ Id. at 219.

^^^ Id. at 221.

'''Id

""^ See, e.g., Florida Bahamas Lines Ltd. v. Barge Star 800, 433 F.2d 1243 (1970); M. Prusman Ltd. v. Ariel Maritime, 1992 AMC 1059 (S.D. Tex. 1991); Pereira v. Utah Transport 764 F. 2d 686 (1985)

"«1 1 Q Symeon SymeonSymeonides, Maritime Conflicts ofLawfi-om the Perspective ofModern Choice ofLaw, 1 Mar. Law 223 (1982)

"^ Lauritzen v. Larsen,Lars 345 U.S. 571 (1953). See also McCulloch v. Sociedad Nacional de Marineros de Honduras, 372 U.S. 10 (1962) 25

A Danish seaman, named Larsen, joined in New York the crew of a vessel registered in

Denmark and flying the flag of that Country. The owner of the ship was a Danish citizen.

The seaman signed a contract, written in Danish, with a clause incorporating Danish law.

While being in the port of La Havana, Larsen was negligent injured. The seaman brought an action in a United States court under the Jones Act.'^° In the trial, the shipowner claimed that Danish law governed his legal duties and not the Statute.

In his opinion, the Court first identified a conflict between the policies under the Jones

Act and the Danish law.'^' Even if the Court first notice that the statute, if read literally,

'^^ conferred a right of action to "any seaman", soon it stated that the Act should be applied "only in accordance with the usual doctrine and practices of maritime law".'^^

Having explaining the possible reach of the statute, the Court commented that "maritime law, like our municipal law, has attempted to avoid or resolve conflicts between competing laws by ascertaining and valuing points of contact between the transaction and the states or governments whose competing laws are involved. The criteria, in general, appear to be arrived at from weighing of the significance of one or more connecting factors between the shipping transaction regulated and the national interest served by the assertion of authority".'^'*

'~° 46 U.S.C, Sec. 597 (1976). The Jones Act regulates the rights of seaman for maritime personal injury. The Act states that "any seaman who shall suffer personal injury in the course of his employment may, at his election, maintain an action for damages at law, with the right of trial by jury, and in such action all statutes of the United States modifying or extending the common law right or remedy in cases of injury to railway employees shall apply."

'^' 345 U.S. at 575. Obviously, a larger recovery was allowed by United States law than by Danish law.

'2- Mat 578, 579.

'"M at 581.

'2^ Id. at 582. 26

The factors considered by the Court, "which, alone or in combination, are generally conceded to influence choice of law to govern a tort claim", were: the place of the wrong,'^^ the law of the flag,'^^ the allegiance or domicile of the injured,'^^ the allegiance of the defendant shipowner, the place of contract''^ the inaccessibility of foreign forum, and the law of the forum. After analyzed each factor, the Court held Danish law applicable: "The parties are both Danish subjects, the events took place on a Danish ship, not within our territorial waters".'-^

3. Romero

The second Supreme Court case developing the modem approach was Romero v.

International Terminal Operating Co.'^" In this case, a Spanish seaman was injured in

New York while aboard a Spanish vessel. The owner of the ship was a Spanish corporation. The injured brought an action under the Jones Act against the shipowner and his New York agent, and a maritime tort action against two American corporation

'^^ In the case, Cuba was the place where the tortious act occurred. However, the Court considered that such factor was "of Hmited appHcation to shipboard torts, because of the varieties of legal authority over water she may navigate". Id at 583.

'^^ The Supreme Court statement regarding the law of flag has became classic: "Perhaps the most venerable and universal rule of maritime law relevant to our problem is that which gives cardinal importance to the law of flag. Each state under international law may determine for itself the conditions on which it will grant its nationality to a merchant ship, thereby accepting responsibility for it and acquiring authority over it. Nationality is evidenced to the world by the ship's papers and its flag". Id. at 584.

'^' The court recognized that later United cases have applied the Jones Act when the injured was an

American citizen, id. at 586. However, in the case, Larsen was neither citizen nor resident of the United States.

'^* The Court considered that the place of contract was not of major importance in a maritime tort. Id. at 589.

'29 Id at 592.

'^° 358 U.S. 354(1958). 27

who were working on board the vessel at the time of the injury. The action was

dismissed by the District Court, and affirmed by the Court of Appeals.

Confronting with the issue of "whether the maritime law of the United States may be

applied in an action involving an injury sustained in an American port by a foreign

seaman on board a foreign vessel in the course of a voyage beginning and ending in a foreign country",'^' the Court applied the Lauritzen analysis'^' and held Spanish law applicable because of the acts that the ship was of foreign registry, the injured and the shipowner were Spanish nationals, and the foreign law in conflict provided a remedy for the injury. The Court also sustained that the place of the tort (New York) was of not relevance to the case,'" and dismissed the claim against the shipowner.

Furthermore, the Romero case contains the transcendental statement by the Supreme

Court that "the broad principles of choice of law and the applicable criteria of selection set forth in Lauritzen were intended to guide courts in the application of maritime law generally".'^"* The Court also held that "of course, due regard must be had for the differing interest advanced by varied aspects of maritime law".'^^

4. Rhoditis

'^' Id. at 381.

'^^ Id. at 382, 383. ("But in the absence of a contrary congressional direction, we must apply those principles of choice of law that are consonant with the needs of a general federal maritime law and with due recognition of our self-regarding respect for the relevant interest of foreign nations in the regulation of maritime commerce as part of the legitimate concern of the international community").

Id. at 384. ("To impose on ships the duty of shifting fi-om one standard of compensation to another as the vessel passes the boundaries of territorial waters would be not only an onerous but also an unduly

speculative burden, disruptive of international commerce and without basis in the expressed policies of this country").

'^'' Id at 382.

'35 Id 28

In Hellenic Lines Limited v. Zachahas Rhoditis,'^^ a Greek seaman was injured in the

Port of New Orleans aboard a Greek ship. The shipowner, a Greek corporation, had its principal place of business in New York, and its was owned by a United States resident. '^^ The seven factors listed in Lauritzen favored the application of the Greek law. However, the Court held that the Lauritzen test was not "a mechanical one".'^^

Considering that the list of seven factors settled in Lauritzen was nos exhaustive, the

'^^ Court stated that the shipowner's base of operation was another factor of importance.

The owner of the ship was a Greek corporation, but as its base of operation was in the

United States and the principal shareholder was an United States citizen, the Court held applicable the Jones Act.''*°

Having settled the opinion of the trilogy Lauritzen-Romero-Rhoditis, is our concern to understand what is the interpretation given to those Supreme Court by the scholars and the tribunals.

'^^398 U.S. 306(1970).

'^^ The Court identified that the stockholder had lived in the United States for 25 years.

'^^398U.S. at308, 309.

'^^ For an application of the base of operation criterion, see, e.g., Pereira v. Utah Transport Inc., 764

F.2d 686 (9th Cir 1985); Villar v. Crowley Maritime Corp., 782 F.2d 1478 (9th Cir. 1986); DeMateos v.

Texaco Panama, Inc., 562 F.2d 895 (3rd Cir. 1977); Chiazor v. Transworld Drilling 648 F.2d 1015 (5th

Cir. 1981). However a incorrect application of the Rhoditis decision has been found in Fisher v. Agios Nicolaos V, 628 F.2d 308 (5th Cir. 1980); see Tetley, supra note 59, at 445.

'''° The Court commented that "we see no reason whatsoever to give the Jones Act a strained construction so that this alien owner, engaged in an extensive business operation in this country, may have the advantage over citizens engaged in the same business by allowing him to escape the obligations and responsibility of a Jones Act "employer"." Id. at 310. 29

Brainerd Currie, in his article commenting the Romero case,''*' supports the application of such methodology in contraposition to a mechanical approach.'"^ Currie argued that even if in Lauritzen the result was accorded to the national interest involved in the case, the approach taken in Romero, yet positive, overlooked American policies.'''^ According to Currie the Romero Court "left no doubt, however, that such a policy, if declared by

Congress, would be respected and enforced. There would be no room for "weighing" the respective policies and interest of the United States and Spain... There would be no room, certainly, for a law of the flag, or the law of the place of contracting, or the law of the place with the greatest number of "contacts" with the transaction."''''' A correct determination of the American interests in the case, explained Currie, would lead the

Court to apply the Jones Act. However, Currie made not comment about the consideration by the Court of the several factors connected to the incident.'"^

Other scholars, as Prof Leflar,'''^ consider that Lauritzen, in addition with Rhoditis, represents an application of the "most significant relationship", but affected by policy

''" Brainerd Currie, The Silver Oar and All That: A Study of the Romero case, 27 U. CHI. L. REV. 1

(1959) . A copy of Currie's article could be found in CURRIE, supra note 26, at 361.

142 Currie, supra note 26, at 364.

'''^ Id. at 365. Currie identified as interest the reimburse of the local suppliers of medical services for the treatment of the foreign seaman. Id. at 366.

""' Id at 370.

'''^ However, the Supreme Court, in Lauritzen, stated that "the purpose of a conflict-of-laws doctrine is to assure that a case will be treated in the same way under the appropriate law regardless of the fortuitous circumstances which often determine the forum". 345 U.S. 571, at 591 (1953). This statement seems to be against the interest analysis proposals which, as we already saw, are in favor of the preferential application of the law of the forum.

'''^ Robert Leflar, American Conflicts Law 287, 288 (1977). 30

considerations.''*' Others autliors,'''^ comment that there is not a clear indication of a

application of the "most significant relationship" approach. Prof. Schoenbaum'''^

explains that the most important factors, from the eighths factors used in the trilogy,

used by courts in seaman's personal injury claims are: the allegiance or domicile of the

injured seaman, the allegiance of the defendant or shipowner or operator, whether a foreign forum is available, and the defendant shipowner's base of operation.'-" He explains that the other factors: law of the flag, the place of injury, the place of the employment contract, and the law of the forum, have less importance because of their fortuitous character.'^' Gilmore and Black'" argue that Lauritzen left unresolved all those cases that do not have the same combination of contacts'".

A very useful interpretation is proposed by Symeonides,'^'' who criticizes the grouping- of-contacts approach accepted in Lauritzen, because of the "tendency to overemphasize physical contacts at the expense of policy considerations".'^^ He condemns the rejection

by the Court of an American policy asserted by the plaintiff, on grounds that it was

"•' Id. at 288.

'''^ SCOLES & Hay, supra note 14, at 629.

'''^ 1 SCHOENBAUM, 5MjDra note 1, at 281.

'^" In this sense, Prof. Schoenbaum supports his ideas with a large list of case law. See, e.g.. Coats v.

Penrod Drilling Corporation, 61 F.3d 1113 (5th Cir. 1995); Chiazor v. Transworld Drilling Co., 648 F.2d 1015 (5th Cir 1981).

'^' Schoenbaum, supra note 1, at 282.

'" Gilmore & Black The Law OF Admiralty 471 (1975).

'" Id. at 472.

^'' Symeonides, supra note 1 18.

'^^ Id. at 245. Symeonides also criticizes the mere counting of contacts and this sense quotes a vast selection of case law. Id. at 244. 31

'^^ Congress the one who should deal with such policy. He also criticizes Romero for overlooking important American policies.'" On the other hand he supports the Rhoditis reasoning. '^"^ In his opinion, the latter case represent an application of an interest analysis approach. '^^ The development of Rhoditis through the subsequent case decided since, he refers, implied the application of American law when there are "substantial contacts with the American legal order", and not a comparison of the American contacts with the foreign nation contacts. '^°

There is a large amount of judicial decisions applying the principles set out in the above mentioned Supreme Court cases. In Zouras v. Menelaus Shipping., Ltd.,'^' the United

States Court of Appeals of the First Circuit held that Lauritzen and Romero "hold that the general maritime law of the United States is inapplicable in the absence of sufficient

'^- 'points of contact' between the transaction or event sued upon and the United States".

As consequence, he Court dismissed the claim on grounds that the only contact with the

'^^ Mat 247.

'^' In this sense he quotes Currie, supra note 136, id. at 250. However, see Kukias v. Chandris Lines,

Inc., 839 F.2d 860 (1st. Cir. 1988) ("it would seem unwise to allow the choice of law to be influenced by a factor, the place of hospitalization, which is only slightly less fortuitous than that of the place of the wrongful act").

158 Id. at 252, 254.

'^^ Id. at 253. ("The Court said that "the significance of one or more factors must be considered in light of the national interest served by the assertion of Jones Act jurisdiction" and then quoted with approval the following phrase from Bartholomew v. Universe Tankships, Inc., which adopted an interest analysis. ..Placing the emphasis where its belongs, that is, on the "liberal purpose" of the Jones Act and the "national interest", opens the way for a more expansive application of the Jones Act.").

160 Id

'^' 336 F.2d 209 (1st. Cir. 1964). The case concerned a creek seaman injured on Liberian vessel, owned by a Liberian corporation, while anchored in the Boston Harbor. The voyage was from Italy to Japan.

'^2 336F.2dat210. 32

United States was the place of the injury. In Sigalas v. Lido Maritime, Inc.,'^^ held that in

Lauhtzen Justice Jackson "selected for that intellectual endeavor a contacts-based choice of law analysis and thereupon set out a number of factors relevant to the task".'^

Furthermore, it added that "a court must view the case as a whole in order to determine which law can most fairly be applied to govern the contractual relationship".'^^

However, in Gulf Trading & Transp. Co. v. Vessel Hoegh Shield,' ^^ the Fifth Circuit did not mention Romero and held that Lauritzen was distinguishable because involved a torts claim under the Jones Act. Consequently, the Court decided to applied Section 188 of the Restament (Second) of Conflicts ofLaw and considered the factors set out in

Section 6 of the Restament.'^' The final decision of the Court was to apply American law.

Another interesting decision is Neely v. Club Med Management Services, Inc.,"^^ where

'^^ the Third Circuit interpreted Lauritzen as adopting a "form of interest analysis",

"designed to ensure that American maritime law of personal injuries applies only where significant American interest are implicated and only in conformity with international law".'^° Then the Court added "in a Jones Act or general maritime case, court deciding

'"776F.2d 1512(llth. Cir 1985).

164 776F.2dat 1517.

'^- Id. See also Chantier Naval Voisin v. MA' Daybreak, 677 F.Supp. 1563 (S.D. Fl. 1988); Sun Schiffahrts G.M.B.H. & Co., K.G., 608 F.Supp. 51 (1984).

'^* 658 F.2d 363 (5th Cir. 1981). See also Arochem Corp. v. Wilomi, Inc., 962 F.2d 496 (5th. Cir. 1992).

'^' 658 F.2d at 366,367.

'^^63F.3d 166 (3rd. Cir. 1994).

'^%3F.3dat 181.

''° Mat 182. 33

whether American contacts are "substantial" (so that American law applies) must at the

threshold ask whether one of the following factors is involved in the incident, in which

case there is basis for prescriptive jurisdiction (which, we explain infra subsection 1, means that significant American interest are implicated): injury to an American seaman or a seaman with American dependents, injury in American territory, American defendants, an American flagged ship, or contractual choice-of-law clause specifying

American law. If so, the second step in the substantial contacts inquiry is for the court to ascertain whether application of American law is reasonable under the circumstances, in which case international law is satisfied".'^' This analysis represents an approach complete different of the one required by the Supreme Court, treating Lauritzen just as a mere "persuasive authority"."^ The decision reflects a desire of several American courts to overlook Lauritzen in order to justify an application of American law, through interest analysis interpretations.'^^

We find a more reasonable approach in Phillips v. Amoco Trinidad Oil Company,''' where the Ninth Circuit sustained that "Lauritzen requires that we compare the substantiality of our interest in a given transaction with that of other nations". '''^The

Court recognized that some factors pointed toward the application of American law'^^

(e.g., the law of the flag). In this case, the operation of the vessel was in just one

''' Mat 182, 183.

''^ Id. at 207 ( Cowen, J., dissenting).

'^^ Tetley, supra note 59, at 447.

'^"^ 632 F.2d 82 (9th Cir. 1980). The case arose from the accident on a drilling rig in Trinidad and

Tobago territorial waters in which were killed two workers and injured twelve more. The rig was flying the American flag, and was drilling under contract to an American corporation, whose principal place of business was in Trinidad.

'^^ 632 F.2d at 86.

''' Id. 34 jurisdiction, differing in this fact from the typical vessel traveling from one country to another. The stated that "our comparison of the points of contact between this transaction and the two nations persuades us that the interest of the United States are weaker and less substantial that the interest of Trinidad, our analysis turns in large part on Trinidad's

strong interest in the conduct of the Mariner I offshore drilling operation".'^'' We think that this was a correct application of the Supreme Court case law by a federal court.''*

5. Conclusion

The law of the flag was a strong factor in the resolutions of conflict of laws issues in maritime law. However, the influence of the modem choice of law theories, and the problems arising from the application of the nationality of the vessel, provoked a reaction of the United States Supreme Courts in applying a more realistic approach. The trilogy Lauritzen-Romero-Rhoditis contain the judicial principles to be applied by courts in the resolution of private international law problems. However, as we just saw, scholars are not completely satisfied with the Supreme Court reasoning. Also, there are differences in the application of the trilogy by the federal courts. Almost each Court of

Appeals has its own reasoning and interpretation. Some courts adhere to the weighing of the contacts set out in Lauhtzen, while others applied a pure interest analysis approach, and there courts using the Restament (Second). We have seen that even some courts,

through special devices, do not apply the trilogy it all.

Is our opinion that the correct meaning of the Supreme Court decision is that applied in decisions like Phillips,''^ where court must identified which States have contact with the transaction and the parties according with the seven Lauhtzen factors, weighing the national interests of each State in see its law applied. This solution is not the same

''' Id. at 86.

178 See also Cruz v. Chesapeake Shipping Inc., 738 F.Supp. 809 (D. Del. 1990).

'^^ See supra note 1 74. 35

proposed by the Restament (Second), and should not be confused. Anyway, is important

to reahzed that the guideUnes given by the Supreme Court are not precise, and an

actualization of its doctrine would be useful to the resolution of choice of law problem

by inferior court. Is important to notice that the conflict of laws issues are becoming

more and more important in United State maritime law.'^° However, the disposition of

the United States Supreme Court should be follow by the rest of the courts in the world,

because represent a more realistic and fair solution to face the problems arising from

international controversies than those territorial solution yet applied in most countries.

C. Contracts

1. Contracts in general'^'

We already studied how federal courts confront conflict of laws issues in admiralty cases

in the United States. From this moment, our purpose is to review each particular juridical

institution of maritime law. Two general question arise at this point. Are federal courts

applying the Lauritzen-Romero-Rhoditis, as seems to be ordered by the Supreme Court?

Is uniform the interpretation by the tribunals of the above referred cases?.

General contracts are part of state law, so federal courts shall apply the conflict of laws rules of the State where they are located, according to the Erie-Klaxon doctrine. In the early cases, state courts applied factors as the place of contracting'^" or the place of performing. '^^ The First Restament choose the application of the law of the place of

In the field offorum non conveniens, choice oflaw is playing a primordial role. See, e.g.. Gulf Oil

V. Gilbert, 330 U.S. 501 (1947) ; Piper Aircraft Co. v. Reyno, 454 U.S. 235 (1981); Pratt v. United Arab

Shipping Co., 585 F.2d 1371 (5th Cir. 1985); In re Air Crash Disaster near New Orleans on July 9, 821

F.2d 1 145 (5th Cir. 1987); Complaint of Geophysical Service, Inc. (The Arctic Explorer) 590

F.Supp.l346 (S.D. Tex. 1984). See also, Tetley, supra note 59, at 799.

'^' See generally, O. Lando, The Conflict ofLaws ofContracts, 189 R.C.A.D.I. 224 (1984).

'*- Milliken v. Pratt, 125 Mass. 374 (1878).

'^^ Pritchard v. Norton, 106 U.S. 124 (1882). 36 contracting, as an adoption of the vested rigths doctrine.'^'' Currie's critic to the result in

'^^ Millikan v. Pratt'^^ was very influential in the United States. In Auten v. Auten,"^ the

State of New York departed from the First Restament, and applied a grouping of contacts approach. According to Scoles & Hay,'^^ the majority of the States are divided between the First Restament and the Second Restament. Apparently, few states seems to apply interest analysis in contract cases.

a. Party autonomy

Party autonomy is a general principle of contractual conflict of laws in the United

States.'^' According to Scoles & Hay, "party autonomy means that the parties are free to select the law governing their contract, subject to certain limitations". '^° Anyway, Beale

was among party autonomy critics,'^' so he did not included any reference to it in the

First Restament. The English decision of Vita Food Products Inc. v. Unus Shipping Co.

Limited''^' rejected that a connection between the contract and the chosen law was

'^^ See Scoles & Hay, supra note 14, at 654.

'^^ Brainerd Currie, Married Women's Contracts, 25 U. CHI. L. REV. 227 (1958), supra note 26, at 77.

'^^ See, e.g., Liiienthai v. Kaufman, 239 Or. 1 (1964); ScOLES & HAY, supra note 14, at 656.

'^'308N.Y. 155(1954).

^^^ Supra no\t 14, at 666.

'^^ Tetley, supra note 59, at 230.

'^^ ^wpra note 14, at 632.

'''For list of critics, see SCOLES & HAY, supra note 14, at 634.

'^2 [1939] A.C. 277., 1939 AMC 257. 37

necessary, but its decision was critiziced by scholars and was not acceptd in Amercian

courts.''^

In the United States, party autonomy is limited in the sense that there must be a

relationship between the chosen law and the parties or the transaction. '^'*The purposes of

tis requirement is to prevent the avoidance by the parties of the legal consequences

derived from the application of an expected applicable law, which could have an effect

'^^ no desire by the parties (e.g., validity). Party autonomy was recognized by the

Restatement Second, '^^ which requires a "substantial" relatioship between the chosen law

and the transaction.'*^^

In M/S Bremen v. Zapata Offshore Co.,'^^ The Supreme Court held that the right solution

"is that such clauses are prima facie valid and should be enforced unless enforcement is

shown by the resisting party to be 'unreasonable' under the circumstances".'^^ The court justified this doctrine because "it accords with ancient concepts of freedom of contract

and reflects an appreciation of the expanding horizons of American contractors who seek

193 SCOLES & Hay, supra note 14, at 634, 635.

' '^' Mat 635.

'^^/c^., at 644.

'^^ Restament (Second) Conflict OF Laws Section 187(1971).

'^^ The Restament also allows the choice of a law no related to the parties if there is a reasonable

basis for its choice. In the comment (f) of Section 187, is explained that the parties can make a choice of

law that is well developed or that which is very familiar to the them. See ScOLES & HAY, supra note 14, at 648.

' ^ 407 U.S. 1 (1972). A American corporation contracted with a German company, in order to tow a drilling rig owned by the former. The contract contained a provision selecting London as a forum. An accident occurred in international waters. Omitting the forum clause, the owner of the drilling rig started proceedings in the United States.

'^^407 U.S. at 10. 38

"^°° business in all parts of the world. The Court accepted the fact that in international

negotiation, the forum in case of eventual controversies is object of strong bargain

between the parties, being often agreed a neutral forum in case of no agreement.^"'

b. Closest connection

According to the Restatement Second, in absence of express choice, one must choose the

law to which the contract has its "most significant relatioship''.-^^-^ The Restament

includes as relevant factors in determining the "most significant relationship": the place of contracting, the place of perfomance, the location of the subject matter, and the domicile, residence, place of incorporation or place of business of the parties. However,

Section 6 of the Restament requieres the analysis of the choice-of-law considerations, conducing to the selection of another law. Even if the closest connection has received strong preference for some American courts, its application as a general rule in contract

^°^ cases is far to be accepted.

Is important to notice that the European Community approved, in 1980, a Convention on

Contractual Obligations,^^'' which states that a contract shall be governed by the law chosen by the parties.'^"^ In case of absence of an express choice by the parties, then the

contract shall be governed by the law of the country with which it is most closely

^°° Id. at 1 1 . See also Vimar Seguros y Reaseguros S.A. v. MA' Sky Reefer, 1 15 S. Ct. 2322 (1995);

Carnival Cruise Lines, Inc. v. Shute, 499 U.S. 585 (1991).

2°'M at 11, 12.

^°^ Restament (Second) § 188. (1973)

^'^^ See supra noXc 186.

'^^ Convention on the Law Applicable to Contractual Obligations, 80/934/EEC, 1980 J.O. (L 266) 1.

For a general introduction to the Convention see generally TETLEY, supra note 59, at 30, 3 1 ; Lando, supra note 178, at 250.

2°^ 80/934/EEC, art. 3, 1980 J.O. (L 266) I. 39 connected. ^°^ As we will see when dealing with the Venezuelan system, this Convention has influenced the new legislative attempts in the Latin-American countries.

2. Charterparties a. Concept and classes

Charter party is the contract of affreightment of a ship.^°^ There are three types of charterparties: bareboat charter, by which a whole ship is hired without crew;-°^ voyage charter, by which the ship, or part of it, including crew is hired for one voyage or some consecutive voyages;-^"^ and time charter, by which a ship and its crew are hired for a period of time, where the owner retains possesion and control of the vessel.- '°

Is important to notice there are all kinds of charterparties depending on the type of transport desired. This charterparties are documented through the use of standart contract forms, prepared by international organizations as the B.I.M.C.O.^" Example of these are

"Gencon", "Baltime", "N.Y.P.E.", "Intertankoy", etc.^'^ b. Choice of the applicable law

2°^ 80/934/EEC, art. 4, 1980 J.O. (L 266) 1.

-°' Tetley, supra note 59, at 247.

^°^ See Healy & Sharpe, Admiralty 262 (1986)("At the inception of the period of the charter, the shipowner surrenders possesion of his vessel to the charterer, who victuals and supplies her and becomes her owner /jro hac vice during the term"). In Reed v. The Yaka. 373 U.S. 410, the United States Supreme Court described a bareboat charter ("full possesion and control of the vessel are delivered up to the charterer for a period of time. The ship is then directed by its Master and manned by his crew; it makes his voyages and carries the cargo he chooses. Services perfomed on board the ship are primarly for his benefit. It has long been recognized in the law of admiralty that for many, if not mot, purposes the bareboat charterer is to be treated as the owner, generally called owner /?ro hac vice. ").

^°^ Healy & Sharpe, supra note 208, at 263.

2'° 5ee id.; TETLEY, supra note 59, at 250.

^" Baltic and International Maritime Conference.

^^^ Seel SCHOENBAUM, supra note 1 , at 1 75. 40

The first principle regarding conflict of laws issues in charteparties, is that party autonomy is usually accepted by U.S. courts.^'^ In the leading case of Siegelman v.

Cunard White Star Line, Ltd.,''^ it was held 1) that the election must bona fide and 2) that the law chosen must be that of a jurisdiction having some relation to the agreement.

Even, if the case concerned the accident while on board of a vessel, and subsequent

death of a passenger, it has been considered a leading principle in maritime contracts generally.-'^

In case the parties have not made a choice of law provision, courts have evolved from a territorial approach, to implied intention of the parties, to the Lauritzen contacts and interests.-'^ In Liverpool & Great Western Steam Co. v. Phenix Ins. Co.,''' an early

Supreme Court authorithy, it was applied the lex loci contractus rule, but at the same

time it was accepted that the parties could have, at the moment of celebrating the contact, other law in view.^'^ In the Cape Araxos case,^" the Court followed Liverpool & Great

Western Steam Co. v. Phenix Ins. Co., and applied the law of the place of contracting, but also look to the implied intention of the parties to see if they had other law in view.^^°

^'^ Tetley, supra note 59, at 273.

-'^221 F.2d 189(2ndCir. 1955).

^'^ TETLEY, supra note 59, at 273.

"'^ Id. at 273-279.

2'^ 129 U.S. 397(1889).

^'^ 129 U.S. at 453.

^'^ Valdesa Compania Naviera, S.A. v. Frota Nacionai de Petroleiros, 348 F.2d 33 (3rd Cir. 1965).

220 348 F.2d at 38. See also C.B. Fox & Co. v. S/S Giuseppe Manzini, 1 10 F.Supp 212 (1953). 41

In Gulf Trading and Transportation Co. v. Vessel Hoegh Shield,^^"" the Court held that

the seven factors set out in Lauritzen provide a "useful outline for our present

determination".^'^ However, the Court did never considered, but applied Section 188 of

the Restament (Second) on Conflict ofLaws, which guided the to the application of

English law.^^^ Then the Court made the analysis of the choice-of-law considerations of

Section 6 of the Second Restatement, which culminated with the identification of relevant American policies in conjuction with the needs of the international legal system, besides the protection of the expectations of the parties, conducing all to held United

States law applicable.-^'' As we already commented in our analysis of the general maritime law, this case represents a misunderstanding of Lauritzen-Romero-Rhoditis, which attempt against the principles and directions established by the Supreme Court in those decisions.^^^

On the other hand, Lauritzen was used in Induron Corp. and MacMillan Bloedel v. M/V

Aigianis,-'^ where a District Court analized the eights factors, and identified the

American interest of protecting American citizens against damages caused by a tort ocurring in the United States, which conduced to the application of the law of the forum.

The Court held that the claim of the injured party was negligence in a collision, so the charterparty (which provided the application of English law) was "tangential" to the claim, being the place of wrongful act of cardinal importance because at the moment of

22' 658 F.2d 363 (5th. Cir. 1981).

222 658 F.2d at 366.

223 Id. at 366,367.

22^ Id. at 368.

22^ See also Cardinal Shipping Corporation v. MA' Seisho Maru, 1983 AMC 2573 (1983).

22^ 1990 AMC 1398 (1989). The issue was the claim of a third party (time charterer), for contribution against the vessel, arising from a collision in U.S. waters. 42 the accident the vessel was moored in an American port, so application of United States

law was not fortuitous but predictable."^^

3. Bill of lading

a. Concept

Bill of lading create particular problems from the point of view of conflict of laws. The special nature of the document and the presence of a wide and mandatory international regulation, are causes of such problems regarding choice of the applicable law.

Countries have given to the regulation of the bill of lading a public policy characterization, which often finish in the application of the law of the forum.

In simple words, a bill of lading is "an acknowledgment by a carrier that it has received goods for shipment".-^*A bill of lading is three function's document: first, is a contract of carriage; second, is a receipt of the acceptance of the goods; and, third, is a document of

^^^ title. They are generally used by the so-called "common carriers". "° Is important to be clear that a bill of lading is not a "negotiable instrument", as this term is generally referred, but a document of transfer, which "entitles the holder to claim deliver) of the goods at the port of discharge from the carrier who has physical possession of them while at sea."^^'

^"^ See also Bulk Charters (Pty) Limited v. Korea Shipping Corp., 1981 AMC 2877, where Lauritzen was applied in determinig whether charter party negotiations between New York brokers for foreign principals conduced to a binding contract.

^^* GiLMORE & Black, supra note 1 52, at 93.

^^^ See William Tetley, Marine Cargo Claims 6 (1978); Gilmore &, Black, supra note 152, at 93.

"^^ For an early description of common carriers, see The Niagara v. Cordes, 62 U.S. 7 (1858) ("A common carrier is one who undertakes for hire to transport the goods of those who may choose to employ him from place to place, bound to take the goods of all who offer, unless his complement for the trip is full, or the goods be of such as he is unaccustomed to convey").

^^' Teltey, supra note 59, 3 1 0. See also, GiLMORE & BLACK, supra note 1 52, at 94,95. 43

There are three International Convention in force regarding bill of lading: The Hague

Rules (1924),23- the HagueA^isby Rules (1968'" and 1979"''), and the Hamburg Rules

(1978);-" and all three Conventions contain a mandatory directive regarding their application."^ The principal characteristic of the Conventions is their purpose of establish a regime of responsibility for the carrier before the owner of the merchandises.

At 1991, the Hague Rules had been adopted by approximately 75 countries,

b. U.S. Carriage of Goods by Sea Act

The United States has not ratified any of the International Conventions above referred.

However, it has enacted legislation (COGSA) incorporating the Hague RulesP^ Section

1312 of COGSA extends the application of the Act to "shipments both inward to the

U.S. and outward from the U.S. in foreign trade"."^ This creates a conflict between the

United States and the countries using the Hague Rules, because the later only apply to shipments outward from the signatory State. Even the Restatement (Second)con\3\ns a different position."^ The situation creates problems, because COGSA has a liability regime different from the one established in the Hague Rules. Aditionally, the Hage-

^^~ International Convention for the Unification of Certains Rules of Law Relating to Bills of Lading,

Aug. 25, 1924. A text of the Convention can be find in 3 Schoenbaum, supra note 1, at 747.

-^^ Protocol to Amend the International Convention for the Unification of Certain Rules of Law

Relating to Bills of Lading, signed at Brussels on 25th August 1924, Feb. 23, 1968. A text of the

Convention can be found in 3 SCHOENBAUM, .supra note 1, at 753.

-^^ Protocol Amending the International Convention for the Unification of Certain Rules of Law Relating to Bills of Lading, August 25, 1924, as Amended by the Protocol of February 23, 1968, Dec. 21,

1979. A text of the Protocol can be found in 3 SchoenbauM, supra note 1, at 759

-^^ United Nations Conventions on the Carriage of Goods by Sea, Mar. 31, 1978, 17 I.L.M. 608.

"^ See Tetley, supra note 59, at 297, 298.

"^ Carriage of Goods by Sea Act 46 U.S.C. Sections 1300-1315 (1936).

^^* See Tetley, supra note 59, at 320.

"' Restament (Second) OF Conflict OF Laws Section 197(1969). . .

44

Visby Rules also contain a different liability regime. Prof Tetley has identified "at least" nine different liability regimes in application.^''^

c. Choice of law and COGSA

Conflict of laws problems arise from the incorporation of foreign law clauses in bills of lading evidencing contracts for the carriage of goods by to or from the United States.-"*'

Normally COGSA would apply, even if the parties have chosen another applicable law.^''- According to Schoenbaum, the general rule is as follows: "(1) a choice of law clause will not be given effect to oust the applicability of COGSA in a case within the terms of the statute and (2) a choice of forum clause stipulating a foreign place of suit

"^''^ will not deprive the United States courts ofjurisdiction to hear the claim. There is numerous case law following this reasoning. ^''^ However, there is recent tendency of U.S. courts to accept choice of law clauses if they increase the carrier liability. ^''^ In Dava

Steel Products v. WV Acadia Forest,^''^ a disctrict court held that "although governs the bill of lading here at issue, that statute explicitly permits shippers and carriers to raise the

'^^^ Tetley, supra note 59 at 322, 323.

^'" See Alan Nakazawa & Alexander Moghaddam, COGSA and Choice ofForeign Law Clauses in

Bills ofLading. 1 7 TUL. MAR. L.J. 1 ( 1 992); TETLEY, supra note 59at 32 1

'^''- GiLMORE & Black, j:«pra note 152 at 130. See also Indussa Corp. v. S.S. Ranborg, 377 F.2d 200,

203 (2d Cir. 1967)("We think that Congress meant to invalidate any contractual provision in a bill of lading for a shipment to or from the United States that would prevent cargo able to obtain jurisdiction over a carrier in an American court from having that court entertein the suit and apply the substative rules Congress had prescribe.")

^''^ 2 Schoenbaum, supra note 1 , at 9 1

-'''' See, e.g., The Steel Inventor, 35 F.Supp. 986 (1940); Indussa Corp. v. S.S. Ranborg, 377 F.2d 200

(2d. Cir. 1967); Union Insurance Society of Canton v. S.S. Elikon, 642 F.2d 721 94th Cir. 1981); Conklin & Garret, Ltd. v. MA' Finnrose, 826 F.2d 1441 (5th Cir. 1987).

^''^ Tetley, supra note 59, at 321,322.

2"^ 683 F.Supp 44 (S.D.N.Y. 1988). 45 shippers's liability by contract above $500 per package". Some authors-^'*' critize the

Acadia Forest case because of conflict with the lenguage of COGSA. According to them, COGSA does not allows any exception. Also, they argue that an incorporation of the Hague- Visby Rules could not be conceived by the parties as only an incorporation of the specific limitation of liability provision.^''^ On the other hand, authors as

Schoenbaum'''' and Tetley,-^" seems to support the application of another law if it increases the carrier's liability. Subsequent case law, has accepted the application of a

^^' higher liability regime.

In a recent Supreme Court decision,-" a carriage of fruit was evedenced by a bill of lading. After the merchandise suffered damages, the cargo insurer sued the vessel interest,-" which opposed an foreign arbitration clause contained in the bill of lading.

The Court held applicable the foreign arbitration clause on the following grounds: 1) a foreign arbitration clause does not lessen the carrier liability in violation of Section 3(8) of COGSA;^^"* 2) the international community adopting the Hague Rules accepts foreign

247 Nakazawa & Moghaddam, supra note 237, at

2^«M,atl3.

^"•^ 2 SCHOENBAUM, supra note 1 , at 92.

^^° Tetley, supra note 59, at 321, 322.

^^' See, e.g., Francosteel Corp. v. Deppe Europe 1990 AMC 2962 (S.D. N.Y 1990); I.N.A. v. The

Atlantic Corona, 704 F.Supp 528 (S.D. N.Y. 1989). However, is important to notice that there are not Court of Appeals decisions on this matter.

252 Vimar Seguros y Reaseguros, S.A. v. MA' Sky Reefer, 1 15 S. Ct. 2322 (1995).

"^ 115S. Ct. at2325.

^^"^ Id. at 2327. In fact, the Supreme Court critizes Indussa Corp. v. S.S. Ranborg, 377 F.2d 200

(1967), and all the case law folowing it. 46

forum selection clauses;-^^ 3) as the Court observed in The Bremen v. Zapata Off-Shore

Co. case, "contemporany principles of international comity and commercial practice" compel the acceptance of international forums }^^

4. Marine insurance

a. Concept

The classic definition of marine insurance was proposed by Willard Phillips: "Marine insurance is a contract whereby, for a consideration stipulated to be paid by anyone interested in a ship, freight, or cargo subject to marine risks, another undertakes to

"^^^ indemnify him against some or all of those risks during a certain period or voyage.

b. Substantive law

Contracts of Marine Insurance are part of admiralty and maritime jurisdiction. ^^^ The general principle is that federal admiralty law applies to marine insurance.-^^ However, it has not been codified in the United States.^^° In Queens Ins. Co. ofAmerica v. Globe &

Rutgers Fire Ins. Co.,'^' the Supreme Court held that inferior courts should interprete marine insurance consistent with English law.'^- In the leading case of Wilburn Boat,'^^

2^^ Id. at 2328.

-^^ Willard Phillips, 1 A Treatise on the Law of Insurance 1,2 (1 853), quoted in Tetley, supra note 59, 337. For a complete explanation of the history and characteristics of marine insurance, see

generally 2 SCHOENBAUM, supra note 1 , at 40 1 ; GiLMORE & BLACK, supra note 1 52, at 53.

^^^ De Lovio v. Boit, 7 F.Cas. 418 (No. 3776) (C.C.D. Mass 1815). See also Insurance Co. v.

Dunham, 78 U.S. (1 Wall.) 1 (1871).

"^ Tetley, supra note 59, at 339.

^^° 2 SCHOENBAUM, supra note 1, at 407.

^^' 263 U.S. 487(1924).

262 England is the world center of international insurance. See 2 SCHOENBAUM, supra note 1 , at 403.

2" Wilburn Boat Co. v. Fireman's Fund Ins. Co., 348 U.S. 310 (1955). .

47 the Supreme Court stated that "in the absence of a controlling federal admiralty principle"^^ state law applies to a marine insurance contract. The consequences of the

Wilburn Boat doctrine are that "if a court holds that because of the Wilbum Boat decision State Law should control, but no State precedent exist, then it will be presumed that English law applies". ^^^ Even if the decision has been generally critized,'^* its effect

^^^ on admiralty has been limited.

c. Choice of the applicable law

Express choice of law is generally accepted by American courts.'^^* The Restatement

Second accepts the express choice of law by the parties. ^^^ In the absence of express

choice, courts laws should apply the Lauritzen test. In Edinburgh Assur. Co. v. R. L.

Burns Corp.,^'^ a complex case in whic were considered several differents relatioships, a

California district court analized Lauritzen and Romero, as well as the hd/S Bremen case, and held that those cases "do not clearly state whether a court should apply ponts of contacts analysis to come to a single choice of substantive law to govern all issues, or whether instead the analysis should be applied on an issue-by-issue basis, as suggested by Restament (Second) of Conflict of law Section 188 (1971)".'^' The Court correctly

^^^ Donald Waesche, Choice and Uniformity ofLaw Generally, 66 TUL. L. REV. 293 (1991) citing Antilles Steamship Co. v. American Hull Insurance Syndicate, 733 F.2d 195 (2d Cir. 1984).

^^^ Id., at 306. See also Eagle Leasing Corp. v. Hartford Fire Ins. Co., 540 F.2d 1257 (1976).

^^^ Id., at 305; GiLMORE & BLACK, supra note 152, at 69; Tetley, supra note 59, at 341 ; 2

SCHOENBAUM, .SMpra note 1, at 408.

^^' 2 SCHOENBAUM, supra note 1 , at 409; Waesche, supra note 255, at 3 1 0.

2^* Navegacion Goya S.A. v. Mutual Boiler & Mach. Ins. Co., 41 1 F.Supp 929 (S.D.N.Y. 1975);

Tetley, supra note 59, at 352; 2 SCHOENBAUM, supra note 1, at 410, 41 1

^^^ Restament (Second) OF THE Conflict OF Laws §§ 192, 193 (1969).

2'° 479 F.Supp. 138(1979).

2^' 479 F.Supp. at 150. 48

applied an analysis issue-by-issue, and it analized the points of contacts between the

transaction and the parties, considering the interest of the differents nations, and held that

English law governed the relationship between the assured and the London broker and

between the latter and the underwriters, California law applied to the relationship

between the assured and its California broker.^^' However, in Navegacion Goya, S.A. v.

Mutual Boiler & Machinery Ins. Co.,''^ a New York district court applied the most

significant relationship to the contract. Tetley argues that United States courts have

applied the most significant relationship test, "sometimes coupled with the governmental

interest anlysis test.^^'' In this sense, he proposes that several contacts are to be used in

^^^ order to determine the properly applicable law in marine insurance.

Normally insurers protect their risk with a specialized company, through a contract of

reinsurance. Legal issues raise regarding the posibility of the insured to take a direct

action against the reinsurer.^'* In those cases, it could be possible that the contract of

reinsurance be subject to a different law that the contract of insurance. -^^ In Arkwright-

Boston Manufacturers Mutual Insurance Co. v. Energy Insurance Agency, Inc.,- * a

^^^ Waesche, supra note 255, at 308.

2'^ 1972 AMC 650 (S.D.N. Y. 1972).

"''* Tetley, ^wpra note 59, at 353; citing, e.g., Albany Insurance Co. v. Wisniewski, 579 F.Supp. 1004

(D.R.I. 1984); Transamerica ICS v. Tugu Insurance, 588 F.Supp. 1301 (S.D.N. Y. 1984); Edinburgh Assu'

V. R.L. Bums, 479 F.Supp. 138 (CD. Cal. 1979).

^^^ Id., at 355. The contacts proposed by Prof. Tettley are: (1) express choice, (2) law of the country of

contracting ot the place of performance, (3) law of the country in which the insurer carries on its business, (4) law of the insurance market with reference to which the contract was made, (5) the place of machinery or centre of gravity, (6) policy holder's residence or place of policy holder's central administration, (7) forms and the language of the contract, (8) location of the risk, (9) jurisdiction or arbitration clauses, (10) the "follow London" clause, and (11) inference infavorem negotii.

^^^ Id. at 362.

^''^ 659 F.Supp. 97 (S.D.Tex. 1987). 49 district court applied the Wilburn Boat case and held Texas law applied, including Texas choice of law.^^^ Analizing which law had the "greastest substantial and legitimate" interest, the Court held Texas law applied.^^°

Other important issue in insurance law, is the direct action by which a third party, who has a liability claim against an insured, may proceed directly by suit against the insurer.-^' Because there is no federal admiralty law on direct action, state law will apply. ^^' In general, state laws do not allow direct action in maritime insurance policies.'^^ In order to find which state law applies, there is not a uniform rule, but coutrs apply federal choice of law rules. '^"^ Some federal courts apply the law of the place were the insurance contract is issue and delivered^^^ and others apply the most significant connection test,'*^ and other applied a exam close to the one of Lauritzenr^'^

^^^ 659 F.Supp at 99.

"^° Id at 100. ("There is persuasive authority to apply the law of the state where the insurance agent is located when the agent has acted to the detriment either of the insured or the insurer ... Although the policy was issued in England, the location of the broker was the key factor in determining under what law the broker would be judge.").

^^' Tetley, supra note 59, at 364.

^^^ Steelmet Inc. v. Caribe Towing Corp., 779 F.2d 1485 (1 1th Cir. 1986). However, see Irwin v. Eagle State Insurance Co., 455 F. 2d 827 (5th Cir. 1972), applied federal conflict of laws rules.

^^^ Tetley, supra note 59, at 369-372. ("In 1993, however, the Louisiana Supreme Court decided that such action was permitted. "(citing Hae Woo Youn v. Maritime Overseas Corp., 605 So. 2d 187 (La. Ct. App. 5th Cir. 1992))).

^*'* King V. Allstate Ins. Co., 906 F.2d 1537 (1 1th Cir. 1990); Cargo Loss from Atlantic Seahorse, 772 F.Supp. 707(1992).

"^^ Eagle Leasing Corp. v. Hartford Fire Ins. Co., 540 F.2d 1257 (5th Cir. 1976); King v. Allstate Ins. Co., 906 F.2d 1537.

^^^ State Trading, 921 F.2d 409 (2nd Cir. 1990); Cargo Loss from Atlantic Seahorse. 772 F.Supp 707

(1991); Ahmed v. Am. P & 1 Ass'n, 44 F.Supp 569 (1978); Tibbits Constr. Co. v. Foremost Ins. Co., 482 F.Supp 830 (1979).

^^^ Transco v. Exploration Co. v. Pacific Employers Ins. Co., 869 F.2d 862 (5th Cir. 1989); Ingersoll- Rand Fin. Corp. v. Employers Ins. of Wausau 771 F.2d 910 (5th Cir. 1985). 50

In those cases where a broker is involved in a transaction between the insured and the

underwriter, it have been contradictory decisions regarding the law applicable to each relation, and we have to understand that they are separate contracts. ^^^ For example, in

Edinburgh Assurance Co. v. R.L Burns Corp.,^^^ a federal court held that the contract between the insured and its broker, and the U.S. broker and the underwriters, were subject to one law; and that the contract between the insured and the London insurance broker, and the contract between the London broker and the London underwriters were subject to another law.

D. Torts

1 . General a. The lex loci delicti

The place of the tort is probably the most transcendental, important and at the same time

controversial conflict rule ever proposed. As consequence of the territorial theory it was held that the state where an event occurs had a legitimate interest in see its law applied to a controversy, because the moment you are inside the borders of a state you must adhere

•^^*' to the laws of such state. In Slater v. Mexican National R. Co., -^'Justice Holmes

expressed that "the theory ... is that, although the act complained of was subject to no

law having force in the forum, it gave rise to an obligation, an obligatio, which, like other obligations, follows the person, and may be enforced wherever the person may be

found ... But as the only source of this obligation is the law of the place of the act, it

^'^Tetley, supra note 59, at 382.

2^^479F.Supp 138(1979).

"^" Tetley, supra note 59, at 427.

-^' 194 U.S. 120(1904). .

51

follows that the law determines not merely the existence of the obligation of the act, ... but equally determines the extent."'^-

Joseph Beale was a strong advocate of the rule, so it was incorporated in the First

Restatement.-'^^ The critics of Walter Cook to the Restatement,'^^'' and the interest analysis theories proposed by Currie,"'^ among others, were very influential in the development of new solutions in tort issues. ^^^ Some courts started to use special legal devices in order to avoid the problems arising from the "law of the place" rule, through the use of

-^^ characterization and renvoi. In the case of Babcock v. Jackson,-^^ a New York court manifested that the place of the tort rule could produce illogical decisions, because in occasions there is no connection between the parties and the place where the incident happened.

b. Most significant relationship

The work of the British author J.H.C. Morris in 1951, regarding the theory of the

"proper law of the tort",'^^ had important influence in the United States, being one the sources for the Restatement (Second) ?^° Morris explains that "a proper law approach.

-^~ 194 U.S. at 126. See also Loucks v. Standart Oil Co. of New York, 224 N.Y. 99 (1918); Alabama

Great Southern R. v. Carrol, 97 Ala. 126 (1892).

^^^ Restatement on the Conflict of Laws § 377 (1934).

~^^ Cook., supra note 23, at 3 1 1

^'^ CURRIE, supra note 26, at 1 89.

^'^ See generally SCOLES & HAY, supra note 14, 565.

^'^ See, e.g.. Levy v. Daniels Udrive Auto Renting Co., 188 Conn. 333 (1928); Emery v. Emery, 45

Cal.2d421 (1955); Grant v. McAuliffe, 41 Cal.2d 859 (1953); ScOLES & Hay, 5M/?ra note 14, at 562.

2^* 12N.Y.2d473(1963).

^^^ J.H.C. Morris, The Proper Law ofa Tort. 64 Harv. L. REV. 881 (1951).

^°° Tetley, supra note 59, at 442. 52

intelligently applied would fiimish a much-needed flexibility, it may be conceded that in

many, perhaps most, situations there would be no need to look beyond the law of the place of wrong, so long as there is no doubt where the place is. But we ought to have a conflict rule broad and flexible enough to take care of exceptional situations as well as the more normal ones, or else we must formulate an entirely new rule to cope with the

"^^' exceptional situations. Otherwise the results will begin to offend our common sense.

Furthermore, explained Morris, a "proper law of the tort" approach will "enable the problems to be broken down into smaller groups and thus facilitate a more adequate

"^°' analysis of the social factors involved.

The Restatement (Second), as we already said, included such approach in its Section 145 that reads: (1) The rights and liabilities of the parties with respect to an issue in tort are determined by the local law of the state which, with respect to that issue, has the most significant relationship to the occurrence and the parties, under the principles stated in

Section 6. (2) Contacts to be taken into account in applying the principles of Section 6 to determine the law applicable to an issue include: (a) the place where the injury occurred,

(b) the place where the conduct causing the injury occurred, c) the domicil, residence, nationality, place of incorporation and place of business of the parties, and (d) the place where the relationship, if any, between the parties is centered. These contacts are to be

"^°^ evaluated according to their relative importance with respect to the particular issue.

The approach taken by the Restatement contemplates a combination of rules like that of

Section 145 with the general considerations of Section 6. The proposal is reflected in the

Supreme Court decisions of Lauhtzen, Romero and Rhoditis, as we already studied.

^°' Morris, supra note 292, at 884, 885.

^°^ Id. at 892.

'"^ Restatement (Second) Conflict OF Laws § 145(1971). .

53

Inferior state and federal courts have applied the test in several jurisdictions. ^°'' Our task

now, is to analyze how American courts dealt with maritime tort conflict of laws problems.

2. Torts on high seas a. Single ship

In Klinghoffer v. S.N.C. Achille Lauro/"^ an United States citizen was murdered in the famous hijacking of the Italian passenger vessel by members of the Palestine Liberation

Organization. The Court applied the Lauritzen test and found that the law of the flag deserved special attention, besides other factors (contractual choice of law for instance) pointing to the application of Italian law. Is reasonable to expect the application of the law of the flag in tort committed aboard a single ship in the high seas. There is, in principle, no other state, besides the nationality of the vessel's state, that could have an interest in the controversy. Other solution would imply the application of a different law depending of the nationality or domicil of each claimant, which does not seems

^°^ rational. b. Collisions

A collision is an accident in which more than one vessel is involved. It represent the most notorious of all maritime tort.^'^^ The basis of liability "is based upon a finding of fault that caused or contributed to the damage incurred. "^°* When there is a collision on

^^^ See, e.g., Casey v. Manson Construction Co., 247 Or. 274 (1967); Kennedy v. Dixon, 439 S.W.2d

173 (Mo. 1969). For a complete commentary about the application of the Restatement (Second) in Unites States courts, see SCOLES & Hay, supra note 14, at 590.

^°^795F.Supp 112(1992).

^°^ See Tetley, supra note 76, 460,461

^°^ SCHOENBAUM, ADMIRALTY & MARITIME LAW 71 1 (1994).

TAO Id. at 714. ("The Standart of care against which fault is determined is derived from (1) general concepts of prudent seamanship and reasonable care; (2) statutory and regulatory rules governing the movement and management of vessels and others maritime structures; and (3) recognized customs and 54 high seas several problems arise, specially the factual impossibility of apply a rule as the law of the place because of absence of a territorial law in the high seas.

In The Scotland,^^"^ in a collision between an English vessel and an American one, the

Supreme Court held the principle that "if a collision occurs on the high seas, where the law of no particular State has exclusive force, but all are equal, any forum called upon to settle the rights of the parties would prima facie determine them by its own law as presumptively expressing the rules ofjustice". ^'° On the other hand, the Court also stated that if the collision occurs in the high seas, and both vessels have the same flag, belonging to the same State, then the applicable law would be that of the common nationality.^"

In The Belgenland,^^~ a Norwegian vessel collided with a Belgian steamship on the high seas. The Supreme Court held that "in cases between parties or ships of different nationalities, arising on the high seas, not within the jurisdiction of any nation, there can

be no doubt that it must be the general maritime law, as understood and administered in

"^'^ the courts of the country in which the litigation is prosecuted. However, the Court recognized that such rule has some "qualifications" that courts must consider. First, courts can not held responsible the persons in charge of foreign vessel when they just complied with "the sailing regulations and rules of navigation prescribed by their own government for their direction on the high seas", because "they are bound to obey such

usages.").

^°^ 105 U.S. 24(1881).

^'° 105 U.S. at 29.

311 Id at 29, 30.

^'^ 114 U.S. 355(1885).

^'^ 114 U.S. 369. 55

regulations".-"'' Second, courts shall look to the law of both nations to which the vessels

belong, and if both law are the same, and they are probed to the court, then such law

should be followed.^ '^ The rule stated in these early cases was incorporated in the First

Restatement^'^' and is still law today.^'^

c. Allisions

^'^ A allision is incident in which a ship collide with an object. In the case arising from the mythical accident of vessel the Titanic, the Supreme Court held applicable the law of the flag.^'^ The Court first held that "the rule that liability for a tort on land is governed by the lex loci delicti is universal". ^"° Then the court held "in maritime disaster upon the high seas, involving one foreign vessel or several vessels of the same nationality, the law of country to which the vessel or vessels belong, governs the rights of all parties".^-'

Then, the Court proceeded to apply the same principle to a single ship allision that is applied to a collision between two ships of the same nation.^-^-

"^ Id. at 370 ("The first of these qualifications can rarely be called into requisition at the present day, since, for more than 20 years past, all the principal maritime nations of the world ... have concurred in adopting a uniform set of rules and regulations for the government of vessels on the high seas. These rules and regulations have become international, and virtually a part of the maritime law."). See also The Scotia, 81 U.S. 170, 184(1871).

^^Ud. See also T\\Q Scotland, 105 U.S. 24, 31 (1881).

^ '^ Restatement of the Law of Conflict of Laws §410(1 934).

^'' See, e.g.. Alkmeon Naviera, S.A. v. M/V "Marina L", 633 F.2d 789 (9th Cir. 1980); Complaint of

Seiriki Risen Kaisha, 629 F.Supp. 1374 (S.D.N.Y. 1986). See also Tetley, supra note 59. at 464; 2

SCHOENBAUM, supra note 1, at 295. However, Schoenbaum explains that those are not unrestricted rules, but accept exceptions when justice requires so.

"^ See SCHOENBAUM, supra note 302, at 713, 714.

^'^ Oceanic Steam Navigation Co. v. Mellor, 233 U.S. 718 (1914).

^-° 233 U.S. at 721.

^'' Id. at 722 ("The law of the flag is the lex loci delicti").

"^ Id at 724. 56

3. Torts in territorial waters a. Single ship

In order to determine the applicable law in a tort in territorial water American courts

have followed the Lauritzen solution. However, I refer to my study regarding the general maritime law.

Anyway, is important to notice the difference set out by courts regarding "blue water" and "brown water" vessels. The former are normal vessel navigating the seas, and the latter are stationary drilling rigs. In Chiazor v. Transworld Drilling Co.,^-^ the Third

Circuit held that the eight Lauhtzen-Rhoditis factors could have a different importance in the context of a tort committed on brown water vessels. In this sense, the Court considered that the place of the wrongful act, the allegiance or domicile of the injured and the place of contract, which the Lauritzen test gave less importance, had a special

^""^ significance regarding permanently stationed vessels. In Phillips v. Amoco Trinidad

Oil Co. ,^-^ the Court also held (regarding the great weight given by Lauritzen to the law of the flag) that "this rationale does not apply to a drilling vessel whose operations are at a fixed location. Here the locus is unchanging, and the logic of local experience can be profitable be applied to the claims of these Trinidad nationals. That these workers were injured immediately offshore of Trinidad is not fortuity, unlike the place of injury on a

"^^^ commercial sailing vessel.

" 648 F.2d 1015 (3rd Cir. 1991). The case concerned a Nigerian employee, employed by two

Nigerian corporations, who was killed while working on a rig located off the coast of Nigeria. The representatives brought an action agist the owners of the rig under the Jones Act. The issue of determining the applicable law concerned the request by the defendants of dismiss on the ground o^forum non conveniens.

^^''648F.2dat 1019.

^^^ 632F.2d82(1981).

^^^ 632 F.2d at 87. See also Tetley, supra note 59, at 468 n. 43. 57

b. Collisions and allisions

I. Liability

In Ishizaki Kisen Company, Ltd. v. United States ofAmerica/' a Japanese vessel

collided with a United States army vessel, in Japanese territorial waters. The Ninth

Circuit applied the place of the tort rule,^-* because usually has the most significant

relationship to the occurrence and the parties as the Restatement (Second) states.^-^^

However, the Court accepted the possibility to apply a specific rule of the forum because

it is part of the procedural law of forum or because "the interest of the forum outweigh

"° those of the place of the collision".

ii. Division of damages

Collisions where both vessels are negligent have created several problems in maritime law, because there are different system to apportion damages. In this sense, in 1910 was enacted a very important International Convention on the subject.^^' The United States is not part of the 1910 Collision Convention.

Until 1975, the United States applied a divided damages solution, by which both parties were equally liable for the damages."- But criticers to such an old concept claimed an

"'510F.2d875(9thCir. 1975).

" 510 F.2d at 879 ("There is no doubt that a collision in foreign territorial waters is governed by the law of the place of collision"). See also Smith v. Condry, 42 U.S. 28 (1843);The Mandu, 102 F.2d 459 (2ndCir. 1939).

''-' Id

'''Id

^^' International Convention for the Unification of Certain Rules of Law with Respect to Collisions between Vessels, Sep. 23, 1910, reprinted in 3 Schoenbaum, supra note 1, at 632.

"- Seel\\Q Catherine: Lewis v. Dickinson, 58 U.S. (17 How.) 170 (1855); SCHOENBAUM, ^wpra note 300, at 730. .

58

adoption of the solution expressed in the 1910 Convention.-'-'^ In United States v.

Reliable Transfer, ^^"^ the Supreme Court adopted the proportionate fault rule by which each vessel is liable in proportion to the comparative degree of its fault. "^ Most conflict of laws problems between the U.S. and the countries which have adopted the 1910

Convention are avoided."^ However, American courts have struggled with claims from cargo owners, because cargo owner may recover all their losses from the non-carrying even if that vessel is only partially at fault."^ This practice is contrary to the rule set forth in the 1910 Collision Convention, which limits cargo recovery to the proportion of fault of the non-carrying vessel.^^^

In a case"^ arising of a collision between a Brazilian and a German steamers, in

Brazilian waters, the insurer of the goods damaged on the German vessel sued the

Brazilian owner. The Court of Appeals of Second District accepted the principle that the

place of tort controls, and extended it to the measure of the liability arising of that tort,^"*"

"^ GiLMORE & Black, supra note 152, at 529.

"''421 U.S. 397(1975).

"^ See SCHOENBAUM, supra note 302, at 730. However, a difference than the 1910 Convention, presumptions of fault, as the Pennsylvania Rule, are still in force in the United States, see TETLEY, supra note 59, at 484.

"^ Tetley, supra note 59, at 496.

"^ Id.: SCHOENBAUM, supra note 302, at 750.

^^* International Convention for the Unification of Certain Rules of Law with Respect to Collisions between Vessels, art. 4, supra note 324. See also SCHOENBAUM, supra note 302, at 75 1

"' The Mandu, 102 F.2d 459 (2nd Cir. 1939).

^^^ 102F.2dat463. 59

what it meant that the 1910 Collision Convention, from which Brazil was party, was applicable.^'"

E. Shipowners' Limitation ofLiability a. Principles

Limitation is a consequence of the early perils in navigation. The fact of the dangerous risk which the ship was exposed, could discourage the development of maritime commerce if the shipowner would not have the possibility of limiting his liability to a certain value in relation to the vessel, specially when the liability raised from circumstances out of his control.^'*" With the technical innovations of this century, the principle has been criticized, but is far away to be abolished.^''^ There are several limitation of liability systems. In the common law countries, with the exception of the

United States, the limitation is based upon the tonnage of a ship and the value of the ship before the accident.^'*'' In the civil law countries, the French principle of the

"abandonment", by which the owner "was able absolve himself of all claims" by waiving his rights over the vessel and freight in favor of his creditors. ^''^ There are three international conventions regulating limitation of liability: the 1924 Limitation

^'" See also The Eagle Point, 142 F. 453 (3rd Cir. 1906); Ralli v. Societa Anonima de Navigazione, 22

F. 994 (S.D.N. Y. 1915); Kloeckner v. A/S Hakedal, 2 1 F.2d 754 (2nd Cir. 1 954); Seiru v. Stena (S.K.K.), 1986 AMC 939 (S.D.N.Y. 1985).

^^^ SCHOENBAUM, supra note 302, at 758.

^'^^ Tetley, supra note 59, at 507 n. 2.

^^^ Id. at 508, 509.

''' Id. .

60

?^^ Convention,^^^ the 1957 Limitation Convention^'* and the 1976 Limitation Convention

The 1957 and 1976 Conventions state the principle of maximum liability derived from

tonnage, but the 1976 Convention increase the limit amount.^'*^ United States has not

adopted any of the above referred International Conventions.^^"

United States has a system by which the limitation is calculated by considering the value

of the vessel after the accident raising the liability plus pending freight.^-^' The system is

based upon absence of "privity or knowledge" of fault causing the loss by the

shipowner.^" However, in case of death the American Act have a tonnage-based provision.^" But this provision only applies to seagoing vessels.-'-'' The procedure is a follows:^^^ the petition for limitation of liability must be filed in a Federal District Court

^'^^ For a brief exposition of the principles set out in the Convention, see Tetley, supra note 59, at 510,511.

"'''^ International Convention Relating to the Limitation of the Liability of Owners of Sea-Going Ships,

Oct. 10, 1951 , reprinted in 3 SCHOENBAUM, ^wpra note 1. at 912.

^''^ International Convention on Limitation of Liability for Maritime Claims, Nov. 19, 1976, reprinted

in 3 SCHOENBAUM, supra note 1 , at 922.

^''^ For comparison between the 1957 and 1976 Conventions, see TETLEY, supra note 59, at 5 1 1-5 13.

^^° See 2 SCHOENBAUM, supra note 1, at 299 n. 7 ("It is difficuh to understand why the U.S. has not adhered to the 1976 Limitation Convention").

^^' Limitation of Shipowners' Liability Act of 1851, ch. 43, 9 Stat. 635 (current version at 46 U.S. Sections 181-189(1984)).

^^^ 46 U.S.C. Section 183(a). See also 2 SCHOENBAUM, supra note 1, at 31 1 ("The determination whether a shipowner may limit liability therefore involves a analysis: ) two-step ( 1 a determination of what acts of negligence or unseaworthiness caused the casualty and (2) whether the shipowner had knowledge or privity of these acts.").

^" 46 U.S.C. Section 183(b).

46 U.S.C. Section 183(f) excludes as seagoing vessels "pleasure yachts, tugs, towboats, towing vessels, tank vessels, fishing vessels or their tenders, self propellers lighters, nondescript self propelled vessels, canal boats, scows, car floats, barges, lighters, or non descript non-self propelled vessels".

^^^ See 2 SCHOENBAUM, supra note 1 , at 305-3 1 1 61 and "the Limitation may be invoked either as a defense to an action seeking damages or

".^^^ an independent complaint in admiralty The shipowner has six month to file the petition after he has notice of claim,^" and should include an amount equal to the shipowners interest in the vessel and freight.^^^ If these conditions are met, the Federal

Court will issue "an injunction to stay all proceedings against the owner of his property with respect to the incident in question". ^^^ All creditors will receive a period of time in which they must file their claims in the proceeding. If the Court grants to the shipowner the right to limit his liability, the creditors would collect on pro-rata basis, considering

^^° the particulars priorities of some creditors. b. Conflicts

Two important conflict of laws questions arise from a limitation of liability procedure.

The court has to analyze according to which law the shipowner has a right to limit his liability and what law will determine the amount of the limitation fund.^^' However, limitation of liability represents an example of complex litigation, and may include several conflict of laws issues.^" United State law present the special characteristic that a foreign shipowner is entitle to present a petition limiting his liability in an American

^^^ Id. at 306.

^" 46 U.S.C. Section 185.

^^^Fed. R. Civ. P. SUPP. F(l).

^^^ 2 SCHOENBAUM, supra note 1, at 308.

^^° Fed. R. Civ. P. Supp. F(8).

^^' Tetley, supra note 59, at 509.

Prof. Tetley explains that choice of law problems arising out of a limitation proceeding include: the law of the tort, the law of presumptions of fault, the law of the division of damages, the law applicable to each different claim, the law applicable to the claim to a non-carrying vessel, the law applicable to the possibility of recovering economic loss, the law of the right of the shipowner to limit, the law of amount of the limitation fund and the law of the distribution of the fund. See TETLEY, supra note 59, at 510. 62

Court.^^^ The First Restatement makes the difference between the law of that creates the cause of action and the Hmitation of HabiHty, which is governed by the law of the forum. ^^"^ On the other hand, The Restatement (Second) states that "issues in tort" are

subject to the law having the most significant relationship to that issue,^^^ but it does have any special provision on limitation of liability. However, courts have not followed that solution. The latter solution is far logic than the former because prevents the parties from forum shopping, giving the court flexibility in order to determine the applicable

^^^ law to each conflict of law issue. However, as it will be seen American courts have not taken a similar approach.

In The Titanic^^', the shipowners looked for the application of the United States

Limitation Liability Act, which was more beneficial to their interest because of the complete loss of the vessel and the large amount of claims in comparison to larger liability according to England law. Justice Holmes, delivering the opinion of the court, held that "it is true that the foundation for a recovery upon a British tort is an obligation created by British law. But it also is true that the laws of the forum may decline

altogether to enforce that obligation on the ground that it is contrary to the domestic

policy, or may decline to enforce it except within such limits as it may impose". ^^^The court explained that the American Act only limit a liability, but this one exists "on other

^" 46 U.S.C. Section 183. See also The Scotland, 105 U.S. (15 Otto) 24 (1881).

^^ Restatement of the Law of Conflict of Laws §411(1 934).

^^^ 1 1 Restatement (Second) Conflict of Laws § 45 ( 97 1 ).

^^^ Tetley, supra note 59, at 5 19.

^^"^ Oceanic Steam Navigation Co. v. Mellor, 233 U.S. 718 (1914).

233 U.S. at 732 (The question is ... whether those who do see fit to sue in this country are limited in their recovery irrespective of the English law"). 63

grounds". ^^' In sum. The Titanic established that the lexfori applied to the limitation,

even its the law of the flag or the lex loci delicti applied to the substance."" Although the

wording of the case is not clear, it could be interpreted that the Supreme Court made a

distinction between procedural nature of amount of the limitation fund and the

substantive essence of the right to limit.^^' However, in Royal Mail Steam Packet Co. v.

Companhia de Navegaco Lloyd Brasileiro,^' it was held that "it is immaterial whether the collision took place on the high seas or in the territorial waters of Belgium, as in either event our courts will limit the liability in accordance with the statutes of the

United States".^^^ This reasoning made no distinction between the right of limit and the fund."^

Later, in The Norwalk Victory, ^^^ an American ship collided with a British vessel in the territorial waters of Belgium. The British vessel was completely lost. Their owner started a proceeding against the bareboat charter of the American vessel in England. The owner and the bareboat charter filed a petition for limitation of liability in a United States federal court, but argued that their liability was limited, not by the American law, but by the 1924 Limitation Convention, ratified by Belgium."^ The Supreme Court, discussing

whether the Belgium limitation law was enforceable by U.S. courts, held that "if it is the

'''Id. at 733.

^^° SCHOENBAUM, supra note 302, at 762.

^^' Tetley, supra note 59, at 520.

"' 31 F.2d 757 (E.D.N.Y. 1928).

"^ 31 F.2d at 759. See also The Mandu, 102 F.2d 459, 463 (2nd Cir. 1939).

•'''' Tetley, supra note 59, at 520.

"^ Black Diamond Steamship Corp. v. Robert Steward & Sons, 336 U.S. 386 (1949).

"^ 336 U.S. at 389. .

64 law of Belgium that the wrong creates no greater liability, than that recognized by the

Convention of 1 924, we cannot, without more, regard our own statutes as expanding that right to recover". ^^' In fact, if the foreign limitation was attached to the substantive right created by the law applicable to the substance, then such limitation was applicable."^

Anyway, the Court did not overrule The Titanic .

Schoenbaum^'^ criticizes the Norwalk Victory decision on grounds that created a distinction between substantive and procedural issues, which has created confusion among inferior courts. In his opinion, the limitation of liability statutes in the different countries do not create any liability but "the creation of the duty that results in liability always proceeds from some other statutory or common law right". ^^° The rule of The

Titanic, argues the mentioned scholar, is reasonable because "normally the shipowner would not file the limitation petition unless suits are pending or threatened against him in American courts". ^^' Furthermore, Schoenbaum criticizes the decision because of its no application of modem choice of law theories as forum non conveniens.^^' However,

Prof Tetley^*^ criticizes both The Titanic and The Norwalk Victory because they failed

^^^ Id. at 395, 396 ("Any other conclusion would disregard the settled principle that, in the absence of some overriding domestic policy translated into law, the right to recover for a tort depends upon and is measured by the law of the place where the tort occurred").

"* Id at 395.

"^ Supra note 302, at 762.

^^°M at 763.

^^' Id. ("An American decree of limitation has no extraterritorial effect, and claimants can still bring suit in the courts of a foreign state"). See also The Titanic, 233 U.S. 718, 734 ("We see no absurdity in supposing that if the owner of the Titanic were sued in different countries, each having a different rule affecting the remedy there, the local rule should be applied in each case").

''' Id

^^^ Tetley, supra note 59, at 521 65

to consider that there are several laws involved in limitation proceeding-'^'' and "there are

suggestions that the law of the responsibility for the collision attaches to the law of the

^^^ right to limit".

The case law after the two decisions does not give clear clue about what is the state of

the American law regarding limitation of liability. In The Western Farmer, ^^^ the Second

Circuit held that "it is necessary to say no more that the Titanic ... finally settled it for us

that such statutes are part of the remedy, and that the law of forum applies".-'^'' In the

Yarmouth Castle, ^** a district court held that "The Titanic may be best explained by

noting that the Court failed to make any distinctions between the provisions of the

limitation statutes which outline the steps to be taken by a shipowner in obtaining a

liability limit and the substantive limit itself... People frame their expectations with

reference to the legal system with which their legal relationships have the most

significant contacts at the time the event in question and expect that the law of that jurisdiction wall govern these relationship."^*^ Then Court concluded that there was not a

overriding public policy of the United States against the application of Panamanian

statute which confers a greater recovery than the American law.^^" In the M/V Swibon,^^^

^^'^ In this sense Prof. Tetley cites Korean Wonis One, 919 F.2d 601 (9th Cir. 1990) and Ta Chi

Navigation Corp., 416 F.Supp. 371 (S.D.N.Y. 1976); as examples of the U.S. courts inclination to apply lex fori.

''' Id

^*^ 210 F.2d 754 (2d. Cir. 1954).

^^^ 2 1 F.2d at 757. See also Ta Chi Navigation Corp. v. M. V. Eurypylus, 4 1 6 F. Supp. 371 (S.D.N.Y. 1976); In re Compania Gijonesa de Navegacion, 590 F.Supp. 241 (S.D.N.Y. 1984).

^** 266 F.Supp 517 (1967).

^^^ 266 F. Supp at 523.

3^° Mat 524.

^^' In the Matter of K.S. Line Corp., 596 F.Supp 1268 (1984). 66 two Korean vessels collided in the high seas. The limitation fund according to Korean law was U.S.$ 250,000.00, and according to United States law was U.S.$

9,000,000.00.^'- The District Court for the District of Alaska held that "the Court in the

NORWALK VICTORY adopted a "two-tier" approach to determining the size of the limitation fund. At first level, the court must apply the United States' limitation of liability statute as required by the TITANIC. This creates the United States fund level as

an upper limit on the size of the fund ... At the second level, this court must then look to applicable choice of law rules to determine which country's substantive law should apply to the case before it".^'^ Subsequently, the Court found that the Korean limitation of

liability statute "is sufficiently directed at the right or obligation that it "attaches to the right" ".^''' The M/V Swibon, even is a fair attempt to conciliate both The Titanic and the

^''^^ Norwalk Victory is not really a correct application of those cases, because there is not an indication in the Supreme Court decision about the application of two-steps test.^'^

3^2 Id.

^'^ Id. at 1270.

^^^ Id. at 1273. Is important to notice that the Court in order to confirm its decision made an analysis of the case under the Lauritzen test. See id. at 1274 ("First, both vessels involved in the accident flew

Korean flags, based their operations in Korea, and were owned and rum by Koreans, thus, the factors of law of the flag, allegiance of the defendant shipowner, and base of operations all point to the application of Korean law. It is also likely that parties contracting with Korean flag ships would expect to be bound by Korean law. Finally, Korea has a significant interest in seeing Korean limitation law applied to Korean ships as part of its interest in protecting the Korean shipping industry").

^'^ Tetley, supra note 59, at 530.

•''^ But see Ruth Rickard, A New Role for Interest Analysis in Admiralty Limitation ofLiability

Conflicts. 21 Tex. Int'l L. J. 495. (1986) ("The K.S. Line court's new "two tier" approach to the Titanic- Norwalk Victory jurisprudence provides an ingenious accommodation of Supreme Court precedent that nevertheless allows the court to resolve the issue through interest analysis"). This author criticizes the current choice of law approach in the U.S. courts an proposes an interest analysis approach, based on the presence or not of a U.S. claimant. TTiis position, even if more logical than the current one, would implied a preference to the lex fori that is so characteristic of the interest analysis theories. 67

In Bethlehem Steel Corp. v. Marriot Corp./^' an American vessel named the Steelton collided with a highway bridge in territory of Canada. The Court of Appeals made the distinction between procedural and substantive statutes, as expressed in the Norwalk

Victory. ^''^ The Court held "though the collision occurred in Canadian waters, insofar as the limitation between the present parties is concerned, the interest of the United States in applying its own legislative determined concept of limitation is stronger than that of

"^^^ Canada. This appears to be a proper case for application of the law of the forum.

Tetley, in his commentary to the Steelton case,""" exposes that this was an improper application of the lex fori, because the limitation of liability presented in the case has a

"closer and more real connection to Canada".''"' In his opinion, a better solution would be

^"^ to dismiss the American action by applying ybrww non conveniens.

In the Arctic Explorer, ''"^ an oceanographic research vessel sank while in Canadian waters, killing part of the crew. Between the casualties there were Canadians, Australian and American citizens. After some of the victims of the accident commenced actions in different court of the State of Texas, the time charterers filed a petition for limitation of liability in a Texas district court. In its decision, the District Court also applied the

^^^ 631 F.2d 441 (6th. Cir. 1980). Before the decision of the Sixth Circuit, there have been three previous decisions concerning the case: two of the district court and one of the Federal Court of Canada. For a commentary of those decisions, see TETLEY, supra note 59, at 524-529.

^^* 631 F.2d at 445. ("This court accepts the district court's conclusion that the Canadian limitation statute is procedural").

3^^ Mat 446.

"^ Supra note 59, at 527,528.

'*"' Id. at 528.

''°^ In the Matter of Geophysical Service, Inc., 590 F.Supp. 1346 (1984). 68

procedural-substantive test of the Norwalk Victory.''"'' The court determine that the right

to invoke the limitation of liability according the Canadian statute was substantive.''"^

Having determined the application of Canadian law, the Court applied the doctrine of the forum non conveniens staying the action, an ordering the time charterers to filed a similar

petition in a Canadian court/"^

F. Maritime Liens

The nature of maritime lien is well described in the early case of The Young Mechanic''"'

where is was defined as "a right which enables a creditor to institute a suit, to take a

thing from any one who may posses it, and subject it, by a sale, to the payment of his

debt; which so inheres in the thing as to accompany it into whosoever hands it may pass

by a sale; which is not divested by a forfeiture or mortgage, or other incumbrance created

by the debtor, can only be a jus in re, in contradistinction to a jus as rem; or in

contradistinction to a mere personal right or privilege. Though tacitly created by the law,

and to be executed only by the aid of a court of justice, and resulting in a judicial sale, it

is really a property in the thing as the right of a pledge or the lien of a bailee for work"."*"^

The proceeding to enforce a maritime law is an "in rem" one.''°^ There are several ranks

"•"^ 590 F.Supp. at 1356.

^°^ Mat 1357.

^°^/cf. at 1358-1361.

"•"^ 30 F.Cas. 873 (No. 18,180) (C.C.D.Me. 1885).

^^^ Id. at 876.

The classic judicial statement about the enforcement of a maritime lien was made in Harmer v. Bell (The Bold Buccleugh), 7 Moore P.C. 267 (Judicial Committee of the Privy Council 1851). 69

of maritime liens/'° Normally, legislations give preferential place to state maritime

credits, then judicial cost, wages, salvage premiums, mortgages, and finally general

maritime claims. In the United States, maritime liens are part of the general maritime

law,""' but two statutes create maritime liens: the Ship Mortgage Act"*'' and the Federal

Maritime Lien Act/'^ A maritime lien represents a potent weapon in the Admiralty

practice/'"

b. Applicable law

Two major choice of law problems raise from maritime liens. One is recognition of

foreign maritime liens and the other is the applicable law to the ranking of maritime

liens to be used by the court.'* '^ United States presents additional problems because its maritime liens law differs from the rest of the world.'"^ I will study how United States courts have decided these two choice of law problems.

I. recognition of foreign maritime liens

'*'° 5ee Tetley, supra note 59, at 538.

'"' SCHOENBAUM, supra note 302, at 422.

'"- 46 U.S.C. §§ 31301-31343 (1988).

""^ 46 U.S.C. §§31341-31343 (1988).

'* According to the Supplemental Rules for Certain Admiralty and Maritime Cases, a maritime lien

may nforced through an action in rem and it is possible to arrest the vessel . See FED. R. Civ. P. SUPP. C. A vessel can be seized in order to enforce a foreign lien, but only if there is a lien of similar nature under American law, SCHOENBAUM, supra note 302, at 458 n. 18.

"' Tetley, supra note 59, at 542,543.

416 SCHOENBAUM, supra note 302, at 455. The United States is not part of any of the International Conventions on the subject. 70

In Vessel Hoegh Shield/'' the Court applied the most significant relationship test

expressed in the Restatement (Second)/"^ However, the Court held American law

applicable. In Ocean Ship Supply v. Leah/''^ the Fourth Circuit applied both the lex loci

contractus'''^'' and the Vessel Hoegh Shield case, concluding that Canadian law was

applicable/^'

Other courts have applied the Lauritzen-Romero-Rhoditis test. In Rainbow Line Inc. v.

M/V Teguila/^^ the Second District analyzed the factors set out in Lauritzen, concluding that all the points of contacts pointed out to the application of United States law.''" In

Gulf Trading & Transportation v. M/V Tento/'^ the Ninth Circuit concluded that "choice of law question involving maritime liens are to be resolved by weighing and evaluating the points of contact between the transaction and the sovereign legal systems touched

and affected by it. This is not to say that multiple contacts are used merely as a device to determine which sovereign has the most compelling governmental interest in a

transaction ... The interest of competing sovereigns may be taken into account without rejecting altogether the contacts the bar and the maritime industry are accustomed to

"'^ Gulf Trading & Transp. Co. v. Vessel Hoegh Shield, 658 F. 363 (5th Cir. 1981).

'*'* See also Arochem Corp. v. Wilomi Inc., 962 F.2d 496 (5th Cir. 1992).

'"'729F.2d971 (4th Cir. 1984).

420 729 F.2d at 973. See also The Scotia, 35 F. 907, 910, 91 1 (S.D.N. Y. 1888) ("Whether alien created by the local law shall be recognized and enforced in another country upon the res when found and seized there, depends upon the law of comity. If the law of the latter country does not recognize any similar liens, as between its own citizens, it will not ordinarily enforce the foreign lien in favor of a foreigner to the prejudice of its own citizens"); Brandon v. S.S. Denton, 302 F.2d 404 (5th Cir. 1962).

421 -729 F.2d at 974. See also Swedish Telecom Radio v. M/V Discovery I, 712 F.Supp 1542 (S.D. Fla.

1988); Cardinal Shipping v. Sisho Maru, 744 F.2d 461 (5th Cir. 1984).

"22 480 F.2d 1024 (2nd Cir. 1973).

''"480F.2dat 1027.

^'^^ 694 F.2d 1191 (9th Cir. 1982). 71 weigh in making the initial determination of governing law"/^^ A decision applying the

Tento reasoning is Forsythe Int'l v. Ruth Venture,'*^^ where the court also applied

Lauritzen, and found that the vessels was flying a flag of convenience, concluding that

Liberian law had not connection to the transaction. The District Court held that English law was applicable/^' On the other hand, courts have enforced choice of law clauses in order to determine the applicable law/-* Even if I can concluded that American court recognizes foreign maritime lien, they are very protective of United States suppliers/^^

ii. ranking of priorities

As general rule, American court have chosen the lexfori to decided the ranking of maritime liens/^° However, according to Tetley a better method would be to determine

"the proper law of the ranking should be ascertained by the forum in its discretionary weighing of the claims of the lien and the mortgage"/^'

''-^ 694 F.2d at 1195.

"•"^ 633 F.Supp 74 (D. Ore. 1985).

''^^ 633 F.Supp at 77. See also Exxon Corp. v. Central Gulf Lines, 707 F.Supp. 155 (S.D.N. Y. 1989);

Comoco Marine v. MA^ El Centroamericano, 1984 AMC 1434 (1983); Chantier Naval Voisin v. MA^ Daybreak, 677 F.Supp. 1563 (S.D.Fla 1988); Induron Corp. v. Aigianis, 1990 AMC 1398 (1989); Espirito Santo Bank v. Tropicana, 1992 AMC 1672 (1990).

''^^ See, e.g., Cantieri Naval! Riuniti v. M/V Skyptron, 802 F.2d 160 (5th Cir. 1986); Sembawang Shipyard v. Charger, 955 F.2d 983 (5th Cir. 1992); North End Oil v. Norman Spirit, 1993 AMC 88 (1992); North End Oil v. Ocean Confidence, 77 F.Supp 12 (1991); Castelan v. Mercantil Parati, 1991 AMC 2141 (1991); Trinidad Foundry and Fabricating Ltd. v. M/V K.A.S. Camila, 1991 AMC 2166 (1991).

""^^ SCHOENBAUM, supra note 302, at 456 ("No reported American case denies a lien to an American supplier on the basis of the application of foreign law").

''^^ See The Scotia, 35 F. 907, 910, 91 1 (1888) ("Liens and privileges, when enforced in other countries than in those by whose laws they are created, are largely treated as remedies; and, unless affecting foreigners alone, take rank according to the law of the forum"); State of Israel v. MA^ Nili, 435 F.2d 242 (5th Cir. 1970); Payne v S.S. Tropic Breeze, 423 F.2d 236 (1st Cir. 1970); Sasportes v. Sol de Copacabana, 581 F.2d 1204 (5th Cir. 1978).

'*•" TETLEY, supra note 59, at 587. 72

G. Conclusion

At this point, I have made an analysis of how American courts analyze conflict of laws problems in maritime and admiralty law cases. Even if the Constitution has granted to the federal jurisdiction an exclusive power over maritime and admiralty cases, a complete uniformity in the court decisions has not been adopted. Until the mid-part of this century, federal courts applied conflict of laws solution based upon territorial theories and the First Restament. The law of the flag had a greater weigh in mariitme law cases. However, the problems arising from the law of the flag principle and the influence of modem choice of law theories, conduced the United States to adopt, in Laurtizen v.

Larsen, a more flexible and reasonable solution in order to find the applicable law, having in consideration the contacts of parties with the transaction and the interest of the differents States in the case. With Romero v. International Terminal Operating Co., the

Supreme Court extended the Lauritzen solution to all maritime cases. Finnally, Hellenic

Lines Limited v. Zacharias Rhoditis exhorted court not to make a mechanical application of the Lauritzen factors. However, the application of the Lauritzen-Romero-Rhoditis trilogy have not been applied in a regular form by the federal inferior courts. Interest analysis and grouping of contacts are used to justify the application of the lex fori, against a more related foreign law. A more close control of such decisions by the

Supreme Court would be recommendable.

Regarding the particular institutions of maritime law, is important to notice that the application of the Supreme Court case law is contradictory. The presence of several federal laws has influenced some courts to justify the application of such statutes, even if the relation of American law with the particular case is not relevant. Also, courts have justified the application of American law on grounds of substantive-procedural analysis, as in Limitation of Liability cases. Marine insurance presents problems because the limits between federal and state law has not been clear defined. 73

Anyway, the United States system represents a very modem solution to conflict of laws problems. In this sense, Courts enforce contractual choice of laws clauses, when there is a connection between the chosen law and the transaction. The closest relationship test, represents a logical approach, specially regarding contracts and torts, and has been recently adopted also the European Community and Latin-American countries in the field of contractual obligations. The American courts seems to be more concerning with foreign law when dealing with maritime controversies. Examples are the progresive acceptance of higher contractual limits on bills of lading and foreign maritime liens. CHAPTER IV THE VENEZUELAN SYSTEM

Once that I have studied how courts decide conflict of laws issues in the United States of

America, is my purpose to make a comparative analysis of the Venezuelan International

Private Law"*^- System, regarding maritime cases.

A. General Characterisctic of the Venezuelan International Private Law System

Venezuela, according to its Constitution, is a federal state/^^ However, a difference of the United States, the Venezuelan Constitution has given general competence to the national government against the state power,''^'* being in practice a central form of government. Between the competences of the national government, there is the power over civil, commercial and procedural legislation.''" So, the regulation of the international private law is a national competence. On the other hand, the judicial power is also national. The consequence of this exclusive competence is that there is not state conflict of laws, as in the United States. Furhtermore, in Venezuela, statutes are the first

source of law.'*^^ In case of absence of a statute regulating a precise case, it is necessary

''^"^ For an explanation about the denomination of this area of law, see Parra-Araguren, supra note 32, at 37, 38.

'^^^ CONSTITUCION DE LA REPUBLICA DE VENEZUELA art 2.

^^Ud. arts. 17, 136.

"^M art. 136, no. 24.

''^^ CODIGO Civil [C. Civ.] art. 4, para. 2.

74 .

75 to look at the analogy, first, or the general principles of law, second.''^^ The decisions of superior courts bind only in the particular case. However, inferior courts are exhorted to accept the Supreme court case law, in order to keep uniformity in the jurisrpudence/^*

The Venezuelan System of International Private Law is charaterized by the dispersion of its rules.'*^^ Early scholars tried to defined the Venezuelan system as territorialist, with two characteristics: "1) Venezuelan courts do not have the legal competence to apply foreign law, but in the special cases stated by the legislator; and 2) in case of doubt, regarding a juridical institution in which appears individuals or things, about the application of the personal status or the law of things, the territoriality must be applied.'"*^'' In his important work about the foundations of international private law in

Venezula, the late Prof. Herrera Mendoza explains that the origin of this reasoning came since the theories of Andres Bello, who in 1832 wrote his ideas about the territorial application of foreign law,'*'" and incorporated them later in the Chilean Civil Code, which was copied by the Venezuela Code of 1862.'*''' Several subsecuent authors have interpreted the system as terrotorialist,"*'*^ based upon the reading of the article 8 of the

'''Id.

''^^ CODIGO DE Procedimiento Civil [C. Pro.] art. 32 1

Tatiana B. de Maekelt, Normas de Conflicto en el Codigo de Comercio venezolano: comentarios y sugerencias para su reforma. in JORNADAS DE Derecho MERCANTIL 5 1 1 (Universidad Catolica Andres Bello, Editorial Sucre, 1978).

Lorenzo Herrera Mendoza, La Escuela Estatutaria en Venezuela y la Evolucion hacia la Territorialidad, in ESTUDIOS SOBRE DERECHO INTERNACIONAL PRIVADO Y TEMAS CONEXOS 121, 124 (Emp. El Cojo, S.A., 1960).

'*'" ANDRES Bello Principiosde Derecho deJentes 39-43 (1837). Bello's ideas are similar to those expressed by Joseph Story, supra note 15.

"''^ Herrera Mendoza, supra note 440, at 143.

'^^ Id. at 167-175. 76

Civil Code.'*'''* Specially important and influenced was the opinion of Anibal Dominici, who stated that "if the Nations allow in special circumstances that a foreign law be apply in own territory in because of convinience or courtesy, comitas gentium, and

surrounding in certain way a part of their sovereignty, before which it does not exist in vigency the difference of status created by the doctrine of International Private Law".'*'*^

On the other hand, the recognized author Luis Sanojo, influenced by the ideas of

Savigny and Foelix, claimed for an statutary interpretation of the Venezuelan law. In his opinion "the individuals, the things and the acts are three necesary elements in the

constitution and existence of any right. So, we believe that it will be a methodologic procedure to divide the laws relative to the individuals, the things and the acts that are going to produce rights, in consequence, we will divide the subject in three parts: the one referred to the personal statute, the one to the real statute, and the one to mixed statute, that is the calification given to the laws dealing to the acts producing rights."'*'*^

However, it was not until 1943 that territorial conception of the international private law was completly refuted by Herrera Mendoza. In his opinion, the Venezuelan system is

"sui-generis", because there is peculiar from Venezuela: "our bases are statutorial, with the regime of the persons linked to the nationality. And when the rules did not work because of the incomplete of the system, in order to solve directly some issue, then is

necessary to look ... to which is derived of the mind of the national legislation, and in

'^""TTie authority of the law extends to all national of foreign individuals being in the Republic." According to Herrera Mendoza this article just refers to the application of criminal, tax, administrative, police, defense laws, and in general to the laws relating to public policy and good costumes

''^^ Anibal Dominici 1 Comentarios alai Codigo Civil de Venezuela 29 ( 1 897), quoted in Herrera

Mendoza, supra note 440, at 1 77. 1 78

'''*^ Luis Sanojo 1 Instituciones de DerechoI Civil Venezolano 34-66 ( 1 873), quoted in Herrera

Mendoza, supra note 440, at 154. 77 last place, to the general principles of international private law, general accepted.'""*^

According to Herrera Mendoza, the real statute is stated in the article 1 of the Civil

9'*'*^ Code/''^ the personal statute is represented by the articles and 26''^° of the Civil

Code, and the mixed statute is established in the article 10 of the Civil Code.''-' The ideas of Herrera Mendoza have been acepted by the modem scholars."*"

B. Sources of Private International Law in Venezuela

The Article 8 of the Civil Procedure Code is fundamental in order to solve conflic of laws problems in Venezuela. This article states that "in the cases of application of

International Private Law, the judges will attend first to the public treaties of Venezuela with the respective State, regarding the issue in dispute; in defect of such treaties, they

shall apply what it is stated by the laws of the Republic regarding the subject or what follows from the mind of the Venezuelan legislation; and in last place they will obey the

principles of such law accepted generally". 1 will refer briefly what are the more important sources and their order of application according to article 8.

"•^^ 5Mpra note 440, at 131.

"The movable and inmovable property located in Venezuela is regulated by the Venezuelan laws, although over them it were had or pretended rights by foreign individuals".

"* "The laws concerning the state and capacity of the individuals compel the Venezuelans, even residing or having their domicil in foreign country".

"The foreign individuals enjoy in Venezuela the same civil rights that Venezuelans, with the exceptions established or that will be establish. This does not impede the application of the foreign laws related to the state and capacity of the individuals in the cases authorized by the International Private

Law" .

"The form and solenmity of the juridical acts made in foreign country, even those essecial to their existence, in order to have efect in Venezuela, are regulated by the law of the place where they are made.

If the Venezuelan law requires public or private instrument for their eveidence, is must be comply.

When the act is made before the competent authority of the Republic, must be subject to the Venezuelan laws".

''" See Daniel Guerra, Derecho Internacional Privado 92-108 (1993); Jose M. Rouvier,

Derecho Internacional Privado Parte General 22 1 -259 ( 1 987). 78

1 . International treaties

Venezuela has ratified several international treaties in the field of conflict of laws,

specially in the field of procedural law. However, I will only refer to those which contain

general principles of private international law.

a. The Bustamante Code

^^^ The principal treaty signed and adopted by Venezuela is the Bustamante Code. The

Code is an ambitous work containing 437 articles, has received the name of its principal

drafter, Antonio Sanchez de Bustamante from Cuba, and reflects the conceptions of this

influenced scholar.''^'' The Convention containing the Code has had considerable success

in the Latin-American region. Besides Venezuela, Bolivia, Brasil, Costa Rica, Cuba,

Chile, Ecuador, El Salvador, Guatemala, Haiti, Honduras, Nicaragua, Panama, Peru and

Dominican Republic have ratified it.

The theorethical basis of the Code was very influenced by the proposals of the Italian writer and politician Pasquale Mancini and the french scholar Antoine Pillet.'*"

According to Bustamante, the function of the international private law is to "delimitate the "legislative competence" of States",'*^^ and each State, through its own rules of international private law, set the scope of that "legislative competence".'*" The fiindamental rules of the Treaty are contained in articles 3 to 8. Article 3"*^^ divides the

"*" Convention on Private International Law, Feb. 20, 1928, 86 L.N.T.S. 254.

^^'^ For complete review of Bustamante and the preparation of the Code, see JURGEN Samtleben

Derecho Internacional Privado en America Latina 54 ( 1 983).

^^Ud. at 191-196.

^^^ Mat 197.

^" Id.

Convention on International Private Law, supra note 453, at 254 ("For the exercise of the civil rights and enjoyment of identical individual guarantees, the laws and regulations in force in each contracting State are deemed to be divided into the three following classes: I. those applying to persons by 79

rules in three, according to the reasoning of Mancini and the italian school: 1 ) personal

or public internal order laws;^^^ 2) territorial or international public order laws;''^" and 3)

voluntary or private order laws. Article 4 states that constitutional rules are of

international public order.''^' Article 6 expands the same precept to the police laws.''^-

Article 6 states that the qualification shall be done according to the lexfoh/^'^ Article 7 allows to each state member to apply the factor of conexion (nationality or domicil) accepted by its own legislation.'*^'* Finally, Article 8 accepts the principle of the acquired rights.'"

reason of their domicil or their nationahty and following them even when they go to another country, termed personal or of an internal public order. II. Those binding alike upon all persons residing in the territory, whether or not they are nationals, termed territorial, local, or of an international public order. III. Those applying only through the expression, interpretation, or presumption of the will of the parties or of one of them, termed voluntary or of private order ").

''^^ Internal public order laws "are those created only to the nationals or domiciliars, according to the system of each country, and follow them wherever they go"; Bustamante I Derecho Internacional Privado no. 348 (1931), quoted in Samtleben, supra note 454, at 208.

''^^ International public order laws "are those dictated for all who are residing in the territory, being nationals or foreigners"; id. at 217.

^^^ Convention on International Private Law, supra note 453, at 254 ("Constitutional precepts are of an international public order").

^^' Id. ("All rules of individual and collective protection, established by political and administrative law, are also of international public order, except in case of express provisions therein enacted to the contrary").

Id. at 256 ("in all cases not provided for in this Code each one of the contracting States shall apply its own definition to the juridical institutions or relationships corresponding to the groups of laws mentioned in article 3"). See also SAMTLEBEN, supra note 454, at 245-252.

''^''Convention on Intemtional Private Law, supra note 453 at 256 ("Each contracting State shall apply as personal law that of the domicil or that of the nationality or that which its domestic legislation may have prescribed, or may hereafter prescribe").

^^^ Id. ("The rights acquired under the rules of tis Code shall have full extraterritorial force in the contracting States, except when any of their effects or consequences is in conflict with a rule of an

international public order"). See also Samtleben, supra note 454, at 203-205; Parra-Aranguren, supra note 32, at 93, 94. 80

The Code has received several critics both as an international treaty and as a private

international law convention. Critics as international treaty include'*^^ the defects of the

translation from the official text in Spanish to the other lenguages; problems of

definition ofjuridical concepts included in the treaty; the problem of interpretation of

the treaty, which is often necessary to do through the personal ideas of Bustamante; and the problems arising of the reserves allowed by article 3 of the Code/^' In this sense,

some States'*^* adopted a general reserve by which the Treaty would not apply when in conflict with their internal legislation,"*^^ while other States made special reserves/^°

Even if these reserves produce difficulties to the authors, in the practice they have not caused major practice problems/'" As an international private law convention the Code present problems with qualification, adquired rights, renvoi, incidental questions, which not of them is clear defined in the Convention/^- Furthermore, the Code does not contain a general clause on public policy, which excludes the application of such principle when there is not express mention in the Code/^^

'^^^ See generally Samtleben, supra note 454, at 85-120.

''^^ Aprobatory Convention of the Convention on Private International Law, Feb. 20, 1928, 86 L.N.T.S. 246, 250 ("Each one of the contracting Republics, when ratifying the present convention, may declare that it reserves acceptance of one or ore articles of the annexed Code, and the provisions to which the reservation refers shall not be binding upon it").

''^^ Bolivia, Costa Rica, Chile, Ecuador and El Salvador.

^^^ See Samtleben, supra note 454, at 102-106.

''^ Brasil, El Salvador, Haiti, Nicaragua, Dominican Republic and Venezuela. The later country reserved 34 articles.

''^' Samtleben, supra note 454, at 1 1 8.

^'^^ Id. at 245-269.

''^^ Id. at 272,273. See also Judgement of November 28, 1940, Corte Federal de Casacion [Supreme

Court] Memoria 1941-1 494; Judgement of June 13, 1941, Memoria 1942-1 448; Judgment of November

11, 1941, Memoria 1942-1 493; Judgement of August 14, 1942, Memoria 1943-1 340, all decisions of the Venezuelan Supreme Court regarding recognition of foreign divorces. 81 b. The Inter-American Convention on General Rules of Private International Law

This convention approved by the Second Inter-American specialized Conference on

Private International Law (CIDIP-II)/^'' held in Montevideo in 1 979, represents the last thinking in conflict of laws theory in America.''^^ The Convention represents an attempt

to unify some of the general principles generally accepted in the Continent. I will refer to the rules of the Convention more transcendentals to my study, and which represents principles of law to be considered in the solution of conflict of laws cases in Venezuela.

Article 2 of the Convention/^^ deals with the proof and application of foreign law. The issue is relevant because of the differences between countries which consider foreign law a matter of fact,"*'^ and those which consider it a question of law.'*'* The article represents a acceptance of the new trend in private international law, of considering the foreign law

''^'* Second Inter-American Specialized Conference on Private International Law (CIDIP-II), May 8,

1979, 18 I.L.M. 121 l[hereinafter CIDIP-II]. The test of Convention on General Rules is printed in 18 I.L.M. 1236.

' ^ See Tatiana B. de Maekelt, General Rules ofPrivate International Law in the Americas. New Approach, 177 R.C.A.D.l. 193,307(1982).

''^^ CIDIP-II, art. 2, supra note 474, at 1236 ("Judges and authorities of the State Parties shall enforce the foreign law in the same way as it would be enforced by the judges of the State whose law is applicable, without prejudice to the parties' being able to plead and prove the existence and content of the foreign law invoked").

''^^ For example U.S, where the foreign law must pleade and proven. See. e.g, SCOLES & HAY, supra note 14, at 403-406. However 5ee Uniform Interstate and International Procedure Act, 13 U.L.A. 355 (1962); Fed. R. Civ. P. 44.

47R For example, Venezuela. For authorities of the acceptance of the foreign law as matter of law in

Venezuela, see Convention on Private International Law, art. 408-413, supra note 453, at 225, 226;

Judgement of June 21, 1 96 1, Corte Superior del Distrito Federal, Jurisprudencia Ramirez & Garay, ler. semestre 1961, at 55- 57; Herrera Mendoza, Extraterritorialidad de Leyes y Sentencias, in Estudios Sobre Derecho International Privado y Temas Conexos, supra note 440, at 54-67. 82

as a question of law/''^ Another important article is the Third,'"'° which regulates the

"unknown institution" as an exception to the application of the foreign law.'^'*' Article 5 contains the "public policy" exception/^- This rules attempts to solve the problems raised by the dispositions of the Bustamante Code, which created confusion with public law.^«^

The public policy exception is a very important institution of private international law in

Venezuela, and it was defined in a very important work of Lorenzo Herrera Mendoza."^''

In the opinion of this author: 1) the exception works when a juridical relationship is determined to be regulated by a foreign law, and the application of this foreign law would represented a violation of the public policy of forum State; 2) this exception, called in the civil law countrier international public policy (orden publico intemacional), is not really international, but its determination is function of each state; 3) this exception is not the same in each state; and 4) not all the internal public policies of one state prohibit the application of foreign law, but the foreign law should be " adverse, incompatible, harmfiil", in relation with the internal public policy rule/*^

''^^ See Maekelt, supra note 475, at 309-312.

^^^ CIDIP-II, art. 3, supra note 474 ("Whenever the law of a State Party has institutions or procedures essential for its proper application that are not provided for in the law of another State Party, this State

Party may refuse to apply such law if it does not have any like institutions or procedures").

''^' See Maekelt, supra note 475, at 3 15.

' CIDIP-II, art. 5, supra note 474 ("The law declared applicable by a convention on private international law may be refused application in the territory of a State party that considers it manifestly contrary to the principles of its public policy (ordre public)").

''^^ See Maekelt, supra note 475, at 3 1 7.

^^'' Herrera Mendoza, supra note 440, at 30-53.

^^^ Id. at 32-36. 83

The Fraudulent Evasion of the Law, was adopted in article 6''*^, and is the first legal general disposition of such principle in Venezuela. Even if the wording of the rule has

been criticized, it represents an important contribution to the international codification/^^

Article 7 represents an acceptance of vested rights."**^ Another new rule in the

Hemisphere is contained in article 8, which states that the incidental questions are considered not necessary to be regulated by the applicable law to the principal issue.'^^^

Finally, a innovative article is the Ninth, wich states that "[t]he different laws that may be applicable to various aspects of one and the same juridical relationship shall be applied harmoniously in order to attain the purposes pursued by each of such law. Any diffilcuties that may be caused by their simultaneous application shall be resolved in the light of the requirements ofjustice in each specific case".''^°

2. National laws

When article 8 of the Code of Civil Procedural asks for the application of the

Venezuelan statutes in defect of an international treaty, what is stating is the application of the private international rules contained in those statutes, and not the application of

'^^^ Convention on Private International Law, art. 6, supra note 453, at 1237 ("The law of a State shall not be applied as foreign law when the basic principles of the law of another State Party have been fraudulently evaded. The competent authorities of the receiving State shall determine the fraudulent intent of the interested party").

''*'' Maekelt, supra note 475, at 321.

^^^ Convention on Private International Law, art. 7, supra note448 ("Juridical relatioships validly established in a State party in accordance with all the laws with which thay have a connection at the time of their establishment shall be reognized in the other State Parties, provided that they are not contrary to the principles of their public policy (ordre public)")

Convention on Private International Law, art. 8, supra note 448 ("Previous, preliminary issues that may arise from a principal issue need not necessarily be resoved in accordance with the law that governs the principal issue").

'"' Id, art. 9. 84

Venezuelan sustantive law.'''' I already explained the doctrinal foundation of the

Venezuelan private international law system as statutory. According to the approach implemented by the Venezuelan legislator the personal law is regulated by the law of the nationality .'''^ On the other hand, the movables and inmovables are regulated by the lex rei sitae/^^ The form of the acts is regulated by the "locus regit actum".

Other important rules contained in the national legislation are, article 483 of the Code of

Commerce which states the national law to govern tha capacity of a person to bing

;'*'"' himself of a bill of exchange article 484 adopts the locus regit actum to the form of bills of exchange;''^- article 116 of same Code which accepts the principle of "autonomy of the parties" in selecting the applicable law and the law of perfomance rule.'*'^ On the

"'' ROUVIER, supra note 452, at 95,96.

''^^ See C.CIV., arts. 9, 26. Even if there is not an explicit mention about the personal status of the

foreigners its application has been constructed by the scholars. See ROUVIER, supra note 452 , at 225; GUERRA, supra note 452, at 93; JOSE LUIS BONNEMAISON DERECHO INTERNACIONAL PRIVADO 212 (1986).

''^^ C. Civ., art. 10. See also BONNEMAISON, supra note 492, at 269-270.

''''' Code of Commerce [C. Com.] art. 483. The second part of this article states that "[i]f this law declares the law of another jurisdiction competent, this latter applies", which is the only legislative acceptance of renvoi. The application of renvoi in Venezuela was early justified by a judicial decision produced in 1906; see dgement of November 1 1, 1906, Corte Superior del Distrito Federal, reprinted in 1 Tatiana B. de Maekelt Material de Clase para Derecho Internacional Privado [Material de Clase] 163,164 (1987); Angel Cesar Rivas,Bulletin defendant la Jurisprudence Venezuelien, 34 Journal de Droit International Prive 527, 528 (1907 ); GUERRA, supra note 452. at 223, 224. The aplication of renvoi was held n a very important decision which applied article 483 through analogy; see Judgement of

September 9, 1966, Juzgado Segundo de Primera Instancia en lo Mercantil de la Circunscripcion Judicial del Distrito Federal y Estado Miranda [First Instance Court], reprinted in 1 Maekelt MATERIAL DE CLASE164, 165.

^^^ C. Com. art 484.

C. Com, art. 116 ("All acts concerning the performance of mercantile contracts entered into in a foreign country, to be performed in Venezuela, will be governed by Venezuelan law, unless the parties have agreed otherwise"). 85

other hand, the exception to the fraudulent evasion of the law has been adopted regarding

adquisition of nationality issues/^'

Article 4 of the Civil Code''^* is very important regarding interpretation of statutes.

According to this rule, in case of absence of an express legal disposition, is necesay to look at statutes regulating similar cases or analogic issues. If after this analysis, there are

still doubts, then it should be applied the general principles of law.

3. General principles of private international law

In case that there is not an international treaty with the specific country or a provision contained in a Venezuelan statute, then the judge should look at the principles of private international law. The principal example of a general principle accepted in Venezuela is the Bustamante Code. It has been said that when article 8 asks for the application of general principles this "labour is simplified in our area thanks to the constant jurisprudence of the Supreme Tribunal of the Republic that, in several opportunities, has afirmed the posible application of the ideas established in the Bustamante Code in front of countries not binded by such convention. '"'^^ However, some courts have misunderstood article 8, and have applied the Bustamante Code as part of mind of the

Venezuelan legislator.^'^^

C. Choice ofthe Applicable Law in Venezuelan Maritime Law

"^^ Ley de Naturalizacion, art. 1 1, no. 6, Gaceta Oficial No. 24.801 (1955).

"^^ C. Civ. art. 4.

'*'' Judgement of February 29, 1968, Juzgado Segundo de Primera Instancia en lo Mercantil de la

Circunscripcion Judicial 1 del Distrito Federal y Estado Miranda, reprinted in Maekelt, supra note 494 , at 161,162. See also Judgement of March 12, 1970, Juzgado Segundo de Primera Instancia en lo Mercantil de la Circunscripcion Judicial del Distrito Federal y Estado Miranda, reprinted in 1 Maekelt, supra note 494, at 162; Judgement of February 23, 1981, Corte Suprema de Justicia, LXXII Jurisprudencia Ramirez &Garay, at551.

^^^ See Judgement of June 21, 1961, Corte Superior del Distrito Federal, 1961 Jurisprudencia Ramirez y Garay, ler. semestre, at 57. 86

Maritime law has been traditionally considered in Venezuela part of the commercial law.^°' However, Venezuela mantains a very old maritime legislation, and has not adopted any of the international convention signed in the field of private maritime law.

For this reason, there are important conflict and differences between the application of the old Venezuelan law and the most modem law of other countries. This situation also exist in the field of conflict of laws. However, new attempts have been made in order to modernize our maritime and international private law legislation.

1 . International treaties

A. Bustamante Code

The Convention on Private International is the only international convention suscribed for Venezuela incorporating conflict of laws rules for maritime issues. Title III of the

Book II refers to "Maritime and Air Commerce", and its divided in two chapters: one dealing with the ships, and the other with contracts.

^°- The law of the flag is a primordial principle regarding conflict of laws issues. Forms of publicity required for the transfer od property in a ship,^°^ obligation of officers and seamen and the internal order of the vessel, ^°'* powers of the captain in respect to loans

^°' Article 2 of the Code of Commerce says: "Acts of commerce, either on the part of all of the contracting parties or of only some of them, are: 17.- The construction and repairing, purchase, sale, resale and exchange of vessels. 18.- The purchase and sale of tools, accesories, victuals, fuel or other objects of equipment for navigation. 19.- Associations of outfitters and those of expeditions, transportations, deposits and maritime consignments. 20.- Freight, bulk loans, insurance and other contracts relating to maritime commerce and to navigation. 21.- the acts which produce obligations in the cases of damages, shipwrecks and salvage.

^°^ The Code contains a sustantive rule regarding the flag of vessel. Article 274 states that "[t]he nationality of ships is proved by the navigation licence and the certificate of registration and has the flag as an apparent distinctive symbol". In my opinion this provision is not satisfactory, because the Code is regulating a institution that depends of the internal administrative law of each country.

^°^ Convention on Private International Law, art. 274, supra note 453 , at 326.

'^'M, art. 281. 87

on bottomry bond,^°^ general average.^"^ According to Tetley, the adoption of the law of

^°^ the flag as unique conflict of laws rule in not "realistic". Of special interest is article

277 which states that "[t]he rights of the creditors after the sale of the ship, and their

extinguishment, are regulated by the law of the flag"; and article 278 which establishs

that "[mjaritime hipothecation, privileges, and real guaranties, constituted in accordance

with the law of flag, have extraterritorial effect even in those countries te legislation of

which does not recognize nor regulate such hypothecation". So these article adopt the

law of the flag to all issues arising of maritime liens and the ranking of distribution of the product of a sale of a vessel. Tetley explains that the law of the flag as a solution to

^°* maritime liens is an incentive to "flag shopping". This rule differs from the Lauhtzen

solution adopted by American courts in maritime lien issues. Prof. Tetley is also in accordance to apply the most significant connection test to maritime liens issues. ^°^ On the other hand, the article contains a positive solution accepting the extraterritorial effect of maritime liens.

Charter parties are regulated by the law of the place of departure of the goods. However, the acts of execution are subject to the law of perfomance.^'° The rule confuses contract

^°^ Convention on Private International Law, art. 286, supra note 453, at 328.

^^^ Id., art. 288.

^°' TETLEY, supra note 59, at 188.

^°^M. at583.

Id., at 586, 587. However, Tetley thinks that the distribution of the fiind should be done in accordance to the law of the forum; id. at 587 ("The proper law of the distribution should be the law of the forum, because only the forum can do the weighing of the rights when marshalling various claims").

^'° Convention on Private International Law, art. 285, supra note 453, at 328 ("The charter party, if not a contract of adhesion, shall be governed by the law of place of departure of the merchandise. The acts of execution of the contract shall be subject to the law of the place where they are perfomed"). 88 of adhesion with the "stardart form contract" commonly use in charter parties.^" The article also does not take in consideration the fact that is difficult to determine the place of departure of the merchandise in time or demise charter, where there are multiple place of departure.^'- The article is not compatible with the development of the differents types of charter parties in international transport.

Collisions are regulated in articles 289 to 294.^''' The Convention makes a distiction between fortuitous and wrongful collisions.^''' Collisions in territorial seas or in high seas between vessels of common flag is regulated by such flag.^'^ If there is not a common flag, then the law of place controls if the collision occurs in territorial waters. ^'^ If the collision has been wrongful, then control the law of the flag of the vessel struck.^ '^ In case of fortuitous collision on the high seas, each vessel "shall bear one half of the sum total of the damage apportioned in accordance with the law of one of them, and the other

"^'^ half apportioned in accordance with the law of the other. I already have studied the

American decisions, and is important to notice that both coincide in applying the common flag in collisions on high seas. However, if the flag are not the same, U.S.

^" Tetley, 5MjDra note 59, at 255.

^'2 Id.

^'^ Is interesting to notice, that the Code included collisions, that evidently are torts, in the chapter concerning "special contracts of maritime and aerial commerce".

^'^ See C. Com. art. 778 ("In case of collision, if it was accidental or caused by the act of the two master or the two crews, each ship shall bear the damage sustained by her; if it was caused by the fault of one of the masters, he shall pay for all the damages; if it cannot be ascertained whether it was accidental, nor which of the masters is to blame, each ship shall pay one-half of the necessary repairs, established by expert").

^'^ Convention on Private International Law, art. 289, supra note 453, at 328.

^^^ Id., art. 290.

^^'^ Id., art. 293.

^'^M, art. 294. 89

courts would apply the lex fori, a difference of the law of flag of the vessel struck

adopted by the Bustamante Code. This solution is in my opinion more fair than the

american solution, because at least the application of the flag of one of the vessel has a

slight connection with the incident, wich sometimes lacks regarding the lex fori.

However, the Code extends the common flag solution to collisions on territorial seas,

while the american solution is to apply the law of the place of the tort without

consideration of the flag of the vessels. I think, in accordance with Tetley,^'^ that

mechanical solutions are not correct in tort issues, because of the fortuitous character of the place of the incident. A flexible test based in factors and conexion represents a more reasonable solution to this problems, and it allows the court a complete examination in order to determine the applicable law.

The Code does not have specific rules concerning maritime insurance,"" single torts,"' bills of lading"- and shipowners' limitation of liability. In general, the Bustamante Code does not represent a fine text of private international law in maritime law. Its solution does not seems to be drafted by experts in maritime affairs, and there are conceptual problems regarding the use of the basic maritime institutions. If my believe that is important a reform to the solutions adopted by the Code, in order to incorporate the

^'^ Supra note 59, at 471,472.

However, contracts of insurance are controlled by "the personal law common to the parties, or in the absence thereof, by the law of the place where the contract of insurance was executed; but the external formalities for proving facts or omissions necessary to th exercise or preservation of actions or rights are subject to the law of the locality where the act or omission which gives rise to them took place"; see

Convention on Private International Law, art. 262, supra note 453, at 322.

M, art. 167, supra note 453, at 298 ("Those arising from actions or omissions involving guilt or negligence not punishable by law shall be governed by the law of the place in which the negligence or guilt giving rise to them was incurred").

" Id., art. 186, supra note 453, at 302 ("In all other contracts and in the case provided for in the preceeding article, the personal law common to the Contracting Parties shall be first applied, and in the absence of such law there shall be applied that of the place where the contract was concluded"). 90 modem developments of conflict of laws science. This task has been in recent years started by the Conference on Private International Law.

B. Inter-American Convention on Law Applicable to International Contracts

The Convention"^ adopted in the Fifth Inter-American Specialized Conference on

Private International Law, held in Mexico from March 14 to 19 of 1994, represents the introduction in Latin-American countries of the principle of the most significant connection test, developed in Europe and the United States. In fact, the drafters of the

Convention had as model the 1980 Rome Convention on the Applicable to Contractual

Obligations."^

The Convention has as fundamental principle the application of the law choose by the parties. The choice must be express or, in case of express choice, must be clear ft-om the conduct of the parties and the contractual clauses. Also, the fact that the parties have chosen a particular forum does not meant the selection of the forum's law."^ The Inter-

American Covention takes the same approach of the 1980 Rome Convention"^ giving the parties wide freedon in their autonomy, and not required a connection between the chosen law and the parties and the transaction."'

^^^ Convencion Interamericana sobre Derecho Aplicable a los Contratos Intemacionales [CIDIP-V],

March 17, 1994, OEA/Ser.K/XXI.5 CIDIP-V/doc.34/94 rev.3. For a text of the Treaty in English see Inter-American Convention on the Law Applicable to International Contracts, March 17, 1994, 1994-1995

Uniform Law Review 189.

See Friedrich K. Juenger, The Inter-American Convention on the Law Applicable to International

Contracts: Some Highlights and Comparisions, 42 AM. J. COMP. L. 381 ,382 (1994). For a development of the CIDIP-V see Garro, Unification and Harmonization ofPrivate Law in Latin American, 40 AM. J. Com. L. 587, 598-604(1992).

"^ ClDIP-V, art. 7, 1994-1995 UNIFORM LAW REVIEW 193.

^^^ Convention on the Law Applicable to Contractual Obligations, art. 3, supra note 523, at 202.

"' Juenger, supra note 524, at 383, 388. m

In case there is not an express or implied choice of law, the Inter-American Convention has taken a different approach from the Rome Convention, even if their fundamental principle is the same: "closest ties". In effect, article 9(1) states that "[i]f the parties have not selected the applicable law, or if their selection proves ineffective, the contract shall be governed by the law of the State with it has the closest ties"."-^ However, article 9(2) explains that "[t]he court will take into account all objective and subjective elements of

the contracts to determine the law of the State with which it has the closest ties"."^ This solution radical differs from the "characeristic performance" of the 1980 Rome

Convention."^ It is important to notice that the drafter of the Inter-American Convention

considered the inclusion of the "charateristic performance" test, but rejected it because of the "mechanistic method of localizing international contracts""' that this solution represents. It is also important to mention the inclusion in the Inter-American

Convention of a escape valve, given to the judge in order to consider substantive law provisions accepted by the international community. In this sense, the second part of article 9(2) reads that "[i]t shall also take into account the general principles of

"^ CIDIP-V. art. 9(1), supra note 523, at 193.

CIDIP-V, art. 9(2), supra note 523, at 193 ("It shall also take into account the general principles of international commercial law recognized by international organizations").

Convention on the Law Applicable to Contractual Obligations, art. 4(2), supra note 1 12 ("... it shall be presumed that the contract is most closely connected with the country where the party who is to effect the performance which is characteristic of the contract has, at the time of conclusion of the contract, his habitual residence, or, in the case of a body corporate or incorporate, its central administration ..."). However, the 1980 Rome Convention makes an exception regarding carriage of goods by sea contracts, see id., art. 4(4) ("... In such a contract if the country in which, at the time the contract is concluded, the carrier has his principal place of business is also the country in which the place of loading or the place of discharge or the principal place of business of the consignor is situated, it shall be presumed that the contract is most closely connected with that counry ...").

^^'juenger, supra note 524, at 390. .

92 international commercial law recognized by international organization","- and article 10 goes further providing that "[i]n addition to the provisions in the foregoing articles, the guidelines, customs, and principles of international commerce law as well as commercial usage and practice generally accepted shall apply in order to discharge the requirement ofjustice and equity in the particular case.""^ Even if the practical results of the Inter-

American Convention will be see in the future, it is represents an important advance in relation with its model, the 1980 Rome Convention."'*

The Convention also contains other important provisions. First, it mantains the principle

of public policy as an exception to the application of foreign law."^ Second, it rejects renvoi.^^^ This exclusion of renvoi is very important in our hemisphere, because its application contradicts with the "most significant relationship"test."'' Third, regarding the mandatory rules of the forum,"^ the Convention accepts the position that they are an

exception to application of a foreign law, but it also adopts the solution of leaving to the forum the eventual application of mandatory rules of a third state, when this third state

"- CIDIP-V, art. 9(2), supra note 523.

CIDIP-V, art. 10, supra note 523. For a discussion of the origins of this "sustantive law approach" see Juenger, supra note 5 1 7, at 39 1

^^'* Juenger, supra note 524, at 393.

"^ CIDIP-V, art. 18, supra note523, at 197.

"^ CIDIP-V, art. 17, supra note523, at 197.

"^ Tetley, supra note 59, at 75, 76.

For commentary on the so-called "lois d'application immediate", see Parra Aranguren, supra note 32, at 121-142. . .

93 has a close relationship to the contract."' Finally, article 4 orders that the Convention be interprete looking at its "international nature and the need to promote uniformity".^'*"

The application of the Convention to maritime contracts is without any doubt. In fact, article 5 states that the Treaty is not applicable to: 1) to issues rising from the personal status of individuals, capacity and of the effects of the nullity of conventions as consequence of the lack of capacity; 2) contracts regarding successions, testaments, marital arrangements or obligations arising from family relationships; 3) obligations arising from negotiable instruments;^'*' 4) obligations arising of transaction in stock exchanges; 5) agreements regarding arbitration or forum selection; and 5) company law questions.^'*' From these exceptions, the only one that could create confusion if the one regarging to the application of the Convention to bills of lading. The point has not been discussed yet because of the recent character of the Inter-American Convention.

However, in Europe, the analysis of the 1980 Rome Convention has conduced to include bills of lading in scope of application of the Convention.^"*^ The principal reason to include bills of lading under the scope of application on the Inter-American Convention is that they are not negotiable instruments but document of title, as described by the

CIDIP-V, art. 1 1, supra note 523, at 195. For a discusion of the differents positions regarding the application of foreign mandatory rules, Tetley, supra note 59, at 124-133.

^"^ CIDIP-V, art. 4, supra note523, at 1 9 1

^'" There are differences in the terminology used in the several translations of the Convention. The Spanish text uses "titulos de credito", the French text "creances negociables", and the English text

"securities". The 1980 Rome Convention uses the term "negotiable instruments" and includes bills of exchange, cheques and promissory notes, see Convention on the Law Applicable to Contractual

Obligations, art. 1, supra note 1 12. 1 think that the term "security", as is used in the United States law, differs cleary from the term "negotiable intruments".

^^^ CIDIP-V, art. 5, supra note 523, at 191

^"^ Tetley, supra note 59 , at 308-3 12. 94

Hague Rules. ^''* In conclusion, maritime contracts such charterparties. carriage of goods

by sea, maritime insurance, salvage, towage, are regulated by the Inter-American

Convention.

2. National legislation and general principles

There are not particuler rules of private international law in Venezuela's maritime law.

Furthermore, Venezuela has not ratified the Hague Rules or the Hamburg Rules, and

does not have internal mandatory rules regarding carriage of goods by sea. Nevertheless,

as I already mentioned, courts will apply the provisions of the Bustamante Code, as

general principles of private international law accepted in Venezuela, in cases where

there is one party belonging to a non-party State.

However, article 116 of the Code of Commerce reads as follows: "All acts concerning

the performance of mercantile contracts entered in a foreign country, to be performed in

Venezuela, will be governed by Venezuelan law, unless the parties have agreed

otherwise". ^''^ This article supported the acceptation of the principle of party autonomy in

Venezuela by Venezuelan scholars.^'"' On the other hand. Prof. Maekelt holds that the

^"^^ chosen law must have relation with the transaction and the parties. However, even if I

share the position of Profesor Maekelt, there is not a conclusive opinion in this sense.

With the adoption of the Inter-American Convention on Law Applicable to International

Contracts, a conflict arises regarding its application to commercial contracts (e.g.,

maritime contracts) in which one party has its residence in a non-party State. I consider

^'''' See International Convention for the Unification of Certains Rules of Law Relating to Bills of

Lading, art. 1(b), supra note 232. See also Tetley, supra note 59, at 308-3 10.

^"•^ C. Com, art. 116.

^"•^ See 1 Sanojo, supra note 446, at 46-47; 1 DOMINICI, supra note 445 , at 46-48; Herrera Mendoza,

5wpra note 440, at 113-114; Maekelt, iw^pra note 439, at 513-517; GUERRA, iw^Dra note 452 , at 338; Judgement of March 12, 1970, Juzgado Segundo de Primera Instancia del Distrito Federal y Estado Miranda, quoted in Maekelt, supra note 475, at 5 16 n. 9.

'''^ Maekelt, supra note 439, at 5 15. 95

that if article 8 of the Code of Civil Procedure is readed literally, then article 1 16 of the

Code of Commerce governs, because the application of the Inter- American Convention

as a general principle of private international law is conditioned to the absence of, first, an international treaty between Venezuela and the particular country and, second, a

Venezuelan statute on the subject. However, this solution, even if the most logical in consideration to the reading of article 8 of the Code of Civil Procedure, would represent the appication of a anachronic conflict of laws approach when our country has accepted

a most logical and coherent solution. That is why it would not be strange to see some

courts applying the Inter-American Convention, with the justification that it represents

the mind of the Venezuelan legislation, as is stated in the mentioned article 8. However, I am not in position to suggest a final solution to this particular problem, and it would be the courts and the authorized scholars the ones who will propose a logical construction of these rules.

D. New Legislative Attempts

1. Draft Project of Organic Law of Navegation and Commerce Through Water^"^

In the 1980's. a legislative attempt to actualize the Venezuelan maritime law was considered and a draft was prepared. The Draft looks for incorporate the development the international and comparative maritime law in Venezuela. Is based upon the

Argentinian Law of 1973, the Chilean reform to the Code of Commerce of 1987, and the international conventions prepared by the International Maritime Committe and the

United Nations Commission on Trade and Development, and in general represents a complete legal text including all the differents maritime law institutions. However, the

Congress of Venezuela has not started the procedure for its approval.

The Draft contains several disposition regarding private international law. Article 273 states that the nationality of a vessel is determine by the law of the state authorizing the

^^^ Ante-Proyecto de Ley de Navegacion y Comercio por Agua [APLNCA]. 96 flying of its flag. Maritime liens are controlled by the law of the nationality of the

^'^'^ vessel, and the extinction of these liens is regulated by the law of the nationality.^^"

These provisions are similar to the provisions contained in the Argentinian Law of J 973, being the same rules used by the Montevideo Treaty of 1940,^^' and they not represent a change of the Bustamante Code rules. Regarding contracts, charter parties are governed by the law of the flag,^^~ and carriage of goods are controlled by the law of the place performance.^" Carriage of passanger are regulated by the Venezuelan law if they are celebrated in the territory of that country or if they start or finish there. "^'^ Salvage contracts are governed by the law of the place where the service was rendered, or by the law of the flag of the vessel rendering the service in high seas.^^^ Maritime insurance contracts follow the common personal law of the parties or, in its absence, the law of the place of celebration.^^^ Regarding collisions, the Draft applies the lex loci delicti rule, unless both vessel have the same nationality and the accident happens in high seas. In the later case, if the vessel have different nationalies, then each vessel is liable according to its own flag. If both vessels belong to countries which adopted the 1910 Collision

Convention, then this one would apply. ^" Average is determine according to the law of

^"^^ APLNCA, art. 274.

^^° APLNCA, art. 275.

"' Supra note 89.

^" APLNCA, art. 572.

APLNCA, art. 573. However, article 466 states that the rules of the Draft are mandatories when the port of loading or discharge is in Venezuelan territory.

APLNCA, art. 574. The Draft also adopts the solution of the Argentinean Law regarding contracts.

^^^ APLNCA, art. 629.

"^ APLNCA, art. 744.

^" APLNCA, art. 589. .

97

the flag, but particular avegares of the carried goods follows the law applicable to the

charter party or the carriage of goods contract."^

These rules present a development regarding the Bustamante Code solutions. The Draft create conflict of laws rules regarding contract of passangers, maritime insurance, salvage, and average; institutions not regulated by the Code. However, the Draft does not take in consideration the latest development of private international law science.

Furthermore, with the adoption of the Inter-American Convention on Law Applicable to

International Contracts, the contract conflict of laws rules of the Draft are out of time.

The law of the flag as conflict of laws rule for charter parties has been abandaned in

^^^ France and Italy. On the other hand, the Draft still has as principal conflict of laws

factor the law of the flag, and I already mentioned the problems arising from this rule.

Besides, the Draft does not attempt to modernize the Venezuelan choice of law approach regarding torts. The lex loci delicti has been abandoned in several jurisdiction of the

United States by more flexible approaches. However, this reticency of the Venezuelan

drafter could be understand because it also exists in Europe, where the attempts to extend the "more significant relationship" test to torts in the 1980 Rome Convention failed.^^°

2. Draft of Law on Rules of Private International Law*^'

"* APLNCA, art. 676.

^^^ In fact with adotion of the 1980 Rome Convention, France supplanted the Law of June 18, 1966,

No. 66-420, art. 3, 1966 Dalloz 295. On the same ground, the Codigo della Navegazzeoni art. 10, has not force in Italy. See Tetley, supra note 59, at 199, 200.

^^° Tetley, supra note 59, at 45 1

^^' The text of the Draft is published in 1 Maekelt, supra note 475, at 139. 98

Between the year of 1963 and 1965 a draft of Law on Private International law was prepared by important Venezuelan scholars. ^^- Even if the proposed draft has received

the support of several international experts, and it is a relevant text on private

international law, I will also refer the rules that could be transcendental in the eventual

solutions of maritime conflict of law.

First, the Draft consider the analogy and the general principles of private international law as alternative sources when there is not international treaty or statute. ^^^ Second, the draft recongnizes the application of the foreign law in the same way as the national

^^^ law.^^'' Third, the principles of renvoi,-^^ adquired rights^^^ and public policy are accepted. Fourth, the domicil is accepted as conflict of laws factor regarding the personal status. ^^^ The principle of party autonomy is accepted, but is limited to a connection between the chosen law and the parties or the transaction. ^^^ In case of absence of a choice of law, then the draft adopts the "most significant connection" test."" Fifth, tort are governed by the lex loci delict."' In general, the Draft represents an important

The authors of the Draft were the professors Roberto Goldschmidt, Gonzalo Parra Araguren and Joaquin Sancez Covisa.

^^^ Draft of Law on Rules of Private International Law [DLRPIL], art. \, supra note 475, at 148.

^^ DLRPIL, art. 2, id at 148.

'" DLRPIL, art. 4, /t^. at 149.

^^^ DLRPIL, art. 5, id at 149.

^^' DLRPIL, art. 6, /a', at 149.

^^^ DLRPIL, art. 13, /J. at 150.

^^"^ DLRPIL, art. 29, /t/. at 153.

"° DLRPIL, art. 30, ;^. at 153.

"' DLRPIL, art. 33, /^. at 154. 99 attempt to codified the private international law in a methodical way, supplanting the actual spread rules by a coherent normative.

E. Conclusion

The Venezuelan system of private international law is statutorial. Their provisions are spread through differents legislative text. In order to determine the applicable law, the judge must look, first, to the international treaties suscribed between Venezuela and the respectve country; second, the national law; third, the general principles of private international law accepted in Venezuela. Regarding maritime law, the Bustamante Code is the principal source of private international law. However, the Code does not represent a fine work in maritime law, and has general problems both as international treaty and private international law text. On the other hand, Venezuela just adopted the

"most close relationship" test as conflict of laws approach regarding international contracts, being an trascendental development in that sense. However, the provisions on torts are still ruled by the lex loci delicti principle. A coherent legislative text on private international law as the Draft on Rules of Private International Law is necessary in order to systematize the Venezuelan system. Regarding maritime law cases, the Draft Project

Organic Law of the Navegaition and the Commerce through Water does not represent an improvement of the current provisions. CHAPTER V CONCLUSIONS

Conflict of laws in the United States are in a process of evolution from the territorial basis of Story and Bealy, to the new approaches of Currie, Cavers and the Restatement

(Second). However, maritime law and admiralty are excluded from the state jurisdiction, and have received a special treament by the Supreme Court and inferior federal courts.

The current approach of conflict of laws in maritime law in the United States is principally represented by three Supreme Court cases: Lauhtzen, Romero, Rhoditis.

This cases call for the analysis of several factors and their connection with the parties and the transaction, and the interest of the differents states connected with the case.

However, the application of this trilogy of Supreme Court decision has not been uniform. Some court emphazice in contacts, while others look more at interest and policies, with which U.S. courts are very concerned in general. Finally, other courts does not apply the case law, applying instead the Restament (Second).

The differences are stronger when each maritime law institution is studied. Institutions as maritime insurance receive a confuse treatment because of problematic divisions between state law and federal law. Others, as limitation of liability and maritime laws, present a pro-forum law character. Collisions are still attache to the lex loci delict.

However, the United States system is reasonable a reflects the expectations of the international business commnity of flexibility, justice and policies. Courts generally accept choice of law clauses, with the accepted limitation in the connection between chosen law and the parties and the transaction.

100 101

Comparing the Venezuelas system with the United States courts case law, we see basic differences. First, the United States decisions are far more developed than the Venezuelan statutes. This is easy to realize because of two circunstances: 1) the facility to adapt to new theorie of the courts in relation to the slower legislative process and 2) the amount of cases arising in U.S. courts in relation with the almost no existence of such in

Venezuela tribunals. Second, the analysis of interest, so important to U.S. courts, is not part of the Venezuela judicial function. Third, the Venezuelan system of private international law in maritime law cases is specially deficient. The Bustamante Code maritime law rules do not represent a fine work in this field, and the Inter-American

Convention on Applicable Law to International Contracts only applies to a specific group of mariitme situations. Furthermore, the only proposal to reform the rules has not offered a radical change.

However, with the implementation in Venezuela the modem international conventions, as those proposed by the Inter-American Conference on Private International Law, the difference is getting closer. The Venezuelan systems has an inclination to adopt the solutions proposed by the other civil law countries, specially in Europe, which was demostrated by the inclusion of the "most significant relatationship" test in Venezuela,

based upon the 1 980 Rome Convention and not on the Restament (Second). The presence of interest analysis in U.S. courts seems to be a major obstacle. However, a more detailed observation of United States conflict of laws science would be useful in order to implement some intelligent devices created in that country. Maritime law is a perfect example in this sense, because of the leading role of United States courts in the development of this area of law. LIST OF CASES

Ahmed v. Am. P & I Ass'n, 44 F.Supp 569 (1978)

Alabama Great Southern R. v. Carrol, 97 Ala. 126 (1892)

Alaska Packers Ass'n v. Industrial Accident Comm'n, 294 U.S. 532 (1935)

Albany Insurance Co. v. Wisniewski, 579 F.Supp 1004 (D.R.I. 1984)

Alkmeon Naviera , S.A. v. MA^ "Marina L", 633 F.2d 789 (9th Cir. 1980)

Allstate Insurance Co. v. Hague, 449 U.S. 302 (1981)

Antilles Steamship Co. v. American Hull Insurance Syndicate, 733 F.2d 195 (2d Cir.

1984)

Arkwright-Boston Manufacturers Mutual Insurance Co. v. Energy Insurance Agency,

Inc., 659 F.Supp 97 (S.D. Tex. 1987)

Arochem Corp. v. Wilomi, Inc., 962 F.2d 496 (5th Cir. 1992)

Auten V. Auten, 308 N.Y. 155 (1954)

Babcock v. Jackson, 12 N.Y.2d 473 (1963)

Bemhard v. Harrah's Club, 16 Cal.3d 313 (1976)

Bemkrant v. Fowler, 55 Cal.2d 588 (1961)

Bethlehem Steel Corp. v. Marriot Corp., 631 F.2d 441 (6th Cir. 1980)

Black Diamond Steamship Corp. v. Robert Steward & Sons, 336 U.S. 386 (1 949)

Bradford Electric v. Clapper, 286 U.S. 145 (1932)

Brandon v. S.S. Denton, 302 F.2d 404 (5th Cir. 1962)

Bulk Charters (Pty) Ltd. v. Korea Shipping Corp., 1981 AMC 2877

102 103

Cantieri Navali Riuniti v. MA^ Skyptron, 802 F.2d 160 (5th Cir. 1986)

Cardinal Shipping v. Sisho Mam, 774 F.2d 461 (5th Cir. 19840

Cargo Loss from Atlantic seahorse, 772 F.Supp 707 (1992)

Camaval Cruise Lines Inc. v. Shute, 449 U.S. 585 (1991)

Carrol v. Lanza, 349 U.S. 408 (1955)

Casey v. Manson Construction Co., 247 Or. 274 (1967)

Castelan v. Mercantil Parati, 1991 AMC 2141 (1991)

C.B. Fox & Co. V. S/S Giuseppe Manzini, 110 F.Supp 212 (1953)

Chantier Naval Voisin v. MA^ Daybreak, 677 F.Supp 1563 (S.D. Fl. 1988)

Chiazor v. Transworld Drilling, 648 F.2dl015 (5th Cir. 1981)

Cipolla V. Shaposka, 439 Pa. 563 (1970)

Clay V. Sun insurance Office, Ltd., 377 U.S. 179 (1964)

Clark V. Clark, 107 N.H. 351 (1966)

Coats V. Penrod Drilling Corp., 61 F.3d 1113 (5th Cir. 1995)

Comoco Marine v. MA^ El Centroamericano, 1984 AMC 1434 (1983)

Complaint of Geophysical Service, Inc. (The Arctic Explorer), 590 F.Supp 1346 (S.D.

Tex. 1984)

Complaint of Seiriki Kisen Kaisha, 629 F.Supp 1374 (S.D.N.Y. 1986)

Conklin & Garret, Ltd v. M/V Finnrose, 826 F2d 1441 (5th Cir. 1987)

Cruz V. Chesapeake Shipping Inc., 738 F.Supp 809 (D. Del. 1990)

Dava Steel Products v. MA^ Acadia Forest, 683 F.Supp 44 (S.D.N.Y. 1988)

De Lovio v. Boit, 7 F.Cas. 418 (No. 3776)(C.C.D.Mass. 1815)

DeMateos v. Taxaco Panama, Inc., 562 f 2d 895 (3rd Cir. 1977)

Eagle Leasing Corp. v. Hartford Fire Ins. Co., 540 F2d 1257 (1976)

Edinburgh Assur. Co. v. R. L. Bums Corp., 479 F.Supp 138 (1979) 104

Emery v. Emery, 45 Cal.2d 421 (1955)

Erie R. Co. V. Tompkins, 304 U.S. 64 (1938)

Espirito Santo Bank v. Tropicana, 1 992 AMC 1 672 ( 1 990)

Exxon Corp. v. Central Gulf Lines, 707 F.Supp 155 (S.D.N. Y. 1989)

Fisher v. Agios Nicolaos V, 628 F.2d 308 (5th Cir. 1980)

Forsythe Int'l v. Ruth Venture, 633 F.Supp 74 (D. Ore. 1985)

Foster v. Legget, 484 S.W.2d 827 (Ky. 1972)

Francosteel Corp. v. Deppe Europe, 1990 AMC 2962 (S.D.N. Y 1990)

Grant v. McAuliffe, 41 Cal.2d 859 (1953)

Gulf Oil V. Gilbert, 330 U.S. 501 (1947)

Gulf Trading & Transportation v. M/V Tento

Gulf Trading & Transp. Co. v. Vessel Hoegh Shield. 658 F.2d 363 (5th Cir. 1981)

Haag V. Barnes, 9 N.Y.2d 554 (1961)

Hae Woo Youn v. Maritime Overseas Corp, 605 So.2d 187 (La. Ct. App. 5th Cir. 1992)

Harmer v. Bell (The Bold Buccleugh), 7 Moore P.C. 267 (Judicial Committee of the

Privy Council)

Hartford Accident and IndemnityCo. v. Delta Pine Land Co., 292 U.S. 143 (1934)

Home Insurance v. Dick, 28 1 U.S. 397 ( 1 930)

I.N.A. V. The Atlantic Corona, 704 F.Supp 528 (S.D.N. Y. 1989)

In Day & Zimmermann, Inc. v. Challoner, 423 U.S. 3 (1975)

Induron Corp. and MacMillan Bloedel v. MA^ Aigianis, 1990 AMC 1398 (1989)

Indussa Corp. V. S.S. Ranborg, 377 f2d 200 (2d Cir. 1967)

Ingersoll-Rand Fin. Corp. v. Emplyers Ins. Of wausau, 771 F2d 910 (5th Cir. 1985) 1

105

In re Air Crash Disaster near New Orleans on July 9, 821 F.2d 1 145 (5th Cir. 1987)

In the Matter of K.S. Line Corp., 696 F.Supp 1268 (1984)

Irwin V. Eagle State Insurance Co., 455 F2d 827 (5th Cir. 1972)

Ishizaki Kisen Co. Ltd. v. United States of America, 510 F.2d 875 (9th Cir. 1975)

Judgement of August 14, 1942, Memoria 1943-1 340

Judgement of February 23, 1981, Corte Suprema de Justicia, LXXII Jurisprudencia

Ramirez & Garay, at 55

Judgement of February 29, 1968, Juzgado Segundo de primera Instancia en lo Mercantil de la Circunscripcion del Distrito Federal y Estado Miranda

Judgement of June 13, 1941, Memoria 1942-1 448

Judgement of June 21, 1961, Corte Superior del Distrito Federal, Jurisprudencia Ramirez

& Garay, ler. semestre 1961, at 55-57

Judgement of March 12, 1970, Juzgado Segundo de Primera Instancia en lo Mercantil de la Circunscripcion Judicial del Distrito Federal y Estado Miranda

Judgement of November 11, 1906, Corte Superior del Distrito Federal

Judgement of November 11, 1 94 1 , Memoria 1 942-1 493

Judgement of November 28, 1940, Memoria 1941-1 494

Judgement of September 9, 1966, Juzgado Segundo de Primera Instancia en lo Mercantil de la Circunscripcion Judicial del Distrito Federal y Estado Miranda

Kennedy v. Dixon, 439 S.W.2d 173 (Mo. 1969)

King V. Allstate ins. Co., 906 F.2d 1537 (1 1th Cir. 1990)

Klaxon Co. V. Stentor Elec. Mfg. Co., 313 U.S. 487 (1940)

Klinghoffer v. S.N.C. Achille Lauro, 795 F.Supp 1 12 (1992)

Kloeckner v. A/S Hakedal, 210 F.2d 754 (2nd Cir. 1954)

Korean Wonis One, 919 F.2d 601 (9 th Cir. 1990) 106

Kukias v. Chadris Lines Inc., 839 F.2d 860 (1st Cir. 1988)

Lauritzen v. Larsen, 345 U.S. 571 (1953)

Levy V. Daniels udrive Auto Renting Co., 188 Conn. 333 (1928)

Lilienthal v. Kaufman, 239 Or. 1 (1964)

Liverpool & Great Western Steam Co. V. Phenix Ins. Co., 129 U.S. 397 (1889)

Lloyd V. Guibert, (1865) L.R. 1 Q.B. 115 (Ex. Ch.)

Mali V. Keeper of Common Jail, 120 U.S. 1 (1887)

McCulloch V. Sociedad Nacional de Marineros de Honduras, 372 U.S. 10 (1962)

Milkovich v. Saari. 295 Minn. 155 (1973)

Milliken v. Pratt, 125 Mass 374 (1878)

M/S Bremen v. Zapata Offshore Co., 407 U.S. 1 (1972)

Mutual Life v. Liebing, 259 U.S. (1922)

Navegacion Goya S.A. v. Mutual Boiler & Mach. Ins. Co., 41 1 F.Supp 929 (S.D.N. Y.

1975)

Neely v. Club Med Management Services, Inc., 63 F3d 166 (3rd Cir. 1994)

Nevada v. Hall, 440 U.S. 410 (1979)

New York Life v. Dodge, 246 U.S. 357 (1918)

North End Oil v. Ocean Confidence. 77 F.Supp 12 (1991)

Oceanic Steam Navigation Co. v. Mellor, 233 U.S. 718 (1914)

Ocean Ship Supply v. Leah, 729 F2d. 971 (4th Cir. 1984)

Payne v. S.S. Tropic Breeze, 423 F2d 236 (1st Cir. 1970)

Pereira v. Utah Transport Inc., 764 f.2d 686 (9th Cir. 1985) 107

Phillips V. Amoco Trinidad Oil Co., 632 F2d 82 (9th Cir. 1980)

Phillips Petroleum Co. v. Shutts, 472 U.S. 797 (1985)

Piper Aircraft Co. V. Ryno, 454 U.S. 235 (1981)

Pope V. Nickerson, 19 Fed. Cas. 1022 (Case No. 1 1,274)(C.C. Mass. 1844)

Pratt V. United Arab Shipping Co., 585 F.2d 1371 (5th Cir. 1985)

Pritchard v. Norton, 106 U.S. 124 (1882)

Queens Ins. Co. Of America v. Globe & Rutgers Fire Ins. Co., 263 U.S. 487 (1924)

Rainbow Line Inc. V. MA^ Tequila (480 F.2d 1024 (1973)

Ralli V. Societa Anonima de Navigazione, 22 F. 994 (S.D.N. Y. 1915)

Reed v. The Yaka, 373 U.S. 410

Romero v. International Terminal Operating Co., 358 U.S. 354 (1959)

Royal Mail Steam Packet Co. V. Companhia de Navegaco Lloyd Brasileiro, 31 F.2d 757

(E.D.N.Y. 1928)

Sasportes v. Sol de Copacabana, 581 F.2d 1204 (5th Cir. 1978)

Schooner Exchange v. M'Faddon, 1 1 U.S. (7 Cranch) 1 16 (1812)

Seiru v. Stena (S.K.K.), 1986 AMC 939 (S.D.N.Y. 1985)

Sembawang Shipyard v. Charger, 955 F.2d 983 (5th Cir. 1992)

Siegelman v. Cunard White Star Line, Ltd., 22 1 F2d 1 89 (2nd Cir. 1 955)

Sigals V. Lido Maritime, Inc., 776 F.2d 1512 (11th Cir. 1985)

Slater v. Mexican National Railroad Co., 194 U.S. 120 (1904)

Smith V. Condry, 42 U.S. 28 (1843)

Stae Trading, 921 F.2d 409 (2nd Cir. 1990)

State of Israel v.MA^NiH

Steelmet Inc. v. Caribe Towing Corp., 779 F2d 1485 (1 1th Cir. 1986) 108

Sun Schiffahrts G.M.B.H. & Co., K.G., 608 F.Supp 51 (1984)

Swedish Telecom Radio v. WW Discovery I, 712 F.Supp 1542 (S.D. Fla. 1988)

Swift V. Tyson, 41 U.S. (16 Pet.) 1 (1842)

Ta Chi Navigation Corp. v. M.V. Eurypylus, 416 F.Supp 371 (S.D.N.Y. 1976)

The Assunzione, [1953] 1 W.L.R. 929

The Belgenland, 1 14 U.S. 355 (1885)

The Catherine: Lewis v. Dickinson. 58 U.S. (17 How.) 170 (1855)

The Eagle Point, 142 F. 453 (3rd Cir. 1906)

The Mandu, 102 F.2d 459 (2nd Cir. 1939)

The Scotia, 81 U.S. 170(1871)

The Scotland, 105 U.S. 24 (1881)

The Steel Inventor, 35 F.Supp 986 ( 1 940)

The Western Farmer, 210 F.2d 754 (2nd Cir. 1954)

The Yarmouth Castle, 266 F.Supp 517 (1967)

The Young Mechanic, 30 F.Cas. 873 (No. 18,180)(C.C.D.Me. 1885)

Tibbits Constr. Co. v. Foremost Ins. Co., 482 F.Supp 830 (1979)

Transamerica ICS v. Tugu Insurance, 588 F.Supp 1301 (S.D.N.Y. 1984)

Transco v. Exploration Co. v. Pacific Employers Ins. Co., 869 F2d 862 (5th Cir. 1989)

Trinidad Foundry and Fabricating Ltd. v. MA^ K.A.S. Camila. 1991 2166 (1991)

Union Insurance Society of Canton v. S.S. Elikon, 642 F2d 721 (4th Cir. 1981)

United States v. Reliable Transfer, 421 U.S. 397 (1975)

Valdosa Compania Naviera, S.A. v. Frota Nacional de Petroleiros, 348 f2d 33 (3rd Cir.

1965)

Villar V. Crowley Maritime Corp., 782 F2d 1478 (9th Cir. 1986) 109

Vimar Seguros y Reaseguros S.A. v. MA^ Sky Reefer. 1 15 S. Ct. 2322 (1995)

Vita Foods Products Inc. v. Unus Shipping Co. Ltd., [1939] A.C. 277

Watson V. Pacific Employers Liability Assurance Corp., 348 U.S. 66 (1954)

Wilbum Boat Co. v. Fireman's Fund Ins. Co., 348 U.S. 310 (1955)

Zouras v. Menelaus Shipping, Ltd., 336 F.2d 209 (1st Cir. 1964) BIBLIOGRAPHY

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